HISTORICAL TAX CREDIT

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Preservation, rehabilitation, adaptive re-use, and re-development of historic buildings utilizing federal historic tax credits and/or related state historic tax credits is a creative and economically beneficial enterprise for developers, investors, owners, and communities. TC3P Advisors offers full-service advisory capabilities for federal and state historic tax credit projects, including estimates of eligible basis, financial projections, tax credit equity investment capital relationships, in-depth transaction analysis, and development of transaction structures to help maximize benefits for all parties.

We help developers comply with tax and historic requirements, allowing them to identify well-suited sources of financing, while also working on behalf of owners, lenders, equity investors, and tax credit syndicators to help maximize tax credit and tax credit equity proceeds, while making sure all additional capital stack components are properly synchronized. 

In order to be eligible for the Texas Historic Preservation Tax Credit, a project must meet the following criteria:

• The property must currently have a historic designation, or be determined eligible for listing in the National Register of Historic Places. Its designation may include: A) listing individually or as a contributing building in a district listed on the National Register of Historic Places, B) as a Recorded Texas Historic Landmark, C) as a State Antiquities Landmark, or D) contributing to the significance of a National Register historic district or other certified historic district. If the building has no historic designation  but is found to be eligible, the nomination process may be undertaken while the work is underway; however, the property must be officially listed by the time the credit is taken. (This differs from the federal program).
• Only buildings qualify for the tax credit. Structures such as bridges, ships, railroad cars, grain silos, and dams are not eligible for the credit.
• The building must be income-producing or non-profit. For example, it may be used as a hotel, for commercial offices, for commercial, industrial, or agricultural purposes, or for rental housing, or any official non-profit use such as a church, museum, or arts center. Owner-occupied residential properties and municipal offices are not eligible for the credit.
• The cost of the rehabilitation project or scope of work must meet the minimum cost threshold of $5,000 for qualified rehabilitation expenditures. An owner may receive the state tax credits in successive applications for any fiscal year after 2014 if the cost threshold and other program requirements are met. (This differs from the federal program’s requirement for a substantial rehabilitation).
• Most rehabilitation costs are eligible for the credit, such as structural work, building repairs, electrical, plumbing, heating and air conditioning, roof work, and painting. Architectural and engineering fees, site survey fees, legal expenses, development fees, and other construction-related costs are also qualified expenditures if such costs are reasonable and added to the property basis. Some costs are not eligible for the credit, such as property acquisition, new additions, furniture, parking lots, sidewalks, and landscaping.
• The building must be placed in service (returned to use) after the rehabilitation. The tax credit is generally allowed in the taxable year that the rehabilitated property is placed in service or the project is completed. Unused franchise tax credit can be carried forward five years or transferred to another entity. (This differs from the federal program.)
• The work undertaken as part of the project must meet the Secretary of the Interior's Standards for Rehabilitation. The entire project is reviewed, including interior and exterior work, as well as related demolition and new construction. A project is certified, or approved, only if the overall rehabilitation project is determined to meet the standards.