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If your business occupies a large space and you\u2019re planning to relocate, expand or renovate in the future, consider the potential benefits of the rehabilitation tax credit. This could be particularly valuable if you\u2019re interested in historic properties.<\/p>\n
The credit is equal to 20% of the qualified rehabilitation expenditures (QREs) for a qualified rehabilitated building that\u2019s also a certified historic structure by the National Park Service. A qualified rehabilitated building is a depreciable building that has been placed in service before the beginning of the rehabilitation and is used, after rehabilitation, in business or for the production of income (and not held primarily for sale). Additionally, the building must be \u201csubstantially\u201d rehabilitated, which generally requires that the QREs for the rehabilitation exceed the greater of $5,000 or the cost of acquiring the existing building.<\/p>\n
Eligible expenses<\/strong><\/p>\n A QRE is any amount chargeable to capital and incurred in connection with the rehabilitation (including reconstruction) of a qualified rehabilitated building. Qualified rehabilitation expenditures must be for real property (but not land) and can\u2019t include building enlargement or acquisition costs.<\/p>\n The 20% credit is allocated ratably, to each year in the five-year period beginning in the tax year in which the qualified rehabilitated building is placed in service. Thus, the credit allowed in each year of the five years is 4% (20% divided by 5) of the QREs concerning the building. The credit is allowed against both regular federal income tax and alternative minimum tax.<\/p>\n Permanent changes to the credit<\/strong><\/p>\n The Tax Cuts and Jobs Act, signed at the end of 2017, made some changes to the credit. Specifically, the law:<\/p>\n It\u2019s important to note that while many individual tax cuts under the TCJA are set to expire after December 31, 2025, the changes to the rehabilitation tax credit aren\u2019t among them. They\u2019re permanent.<\/p>\n Maximize the tax benefits<\/strong><\/p>\n Contact us to discuss the technical aspects of the rehabilitation credit. There may also be other federal tax benefits available for the space you\u2019re contemplating. For example, various tax benefits may be available depending on your preferences regarding how a building\u2019s energy needs will be met and where the building will be located. In addition, there may be state or local tax and non-tax subsidies available.<\/p>\n Beyond these preliminary considerations, we can work with you and construction professionals to determine whether a specific available \u201cold\u201d building can be the subject of a rehabilitation that\u2019s both tax-credit-compliant and practical to use. And, if you find a building that you decide to buy (or lease) and rehabilitate, we can help you monitor project costs and substantiate the project\u2019s compliance with the requirements of the credit and any other tax benefits.<\/p>\n \u00a9 2025<\/em><\/p>\n <\/body> If your business occupies a large space and you\u2019re planning to relocate, expand or renovate in the future, consider the potential benefits of the rehabilitation tax credit. This could be particularly valuable if you\u2019re interested in historic properties. The credit is equal to 20% of the qualified rehabilitation expenditures (QREs) for a qualified rehabilitated building […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,10,19],"tags":[8,11,12],"class_list":["post-17365","post","type-post","status-publish","format-standard","hentry","category-articles","category-news","category-small-business","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=17365"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17365\/revisions"}],"predecessor-version":[{"id":17366,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17365\/revisions\/17366"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=17365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=17365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=17365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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