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Certified Rehabilitation Tax Credit

  • Business
  • Certified Rehabilitation Tax Credit

 

  • Credit is against taxes imposed by Kentucky Revised Statutes 141.020, 141.040, 141.0401, or 136.505.
  • The credit is refundable and transferrable.
  • Kentucky Heritage Council (KHC) determines what properties qualify for the credit.
  • The credit can be for the rehabilitation of a residence or commercial property that is located in a historic district.
  • The KHC determines what guidelines must be met for each property.
  • To apply for a credit, an application must be submitted to the KHC by the 30th day after the close of a calendar year (January 30th).
  • Authorized tax credits shall be applied to tax returns for periods ending on or after December 31, 2005.
  • Credits may be carried forward but must be used within 7 years of the taxable year the certified rehabilitation was completed.
  • The total amount of credit allowed within any budgeted fiscal year is three million dollars ($3,000,000) prior to April 30, 2010 and five million dollars ($5,000,000) on or after April 30, 2010.
  • If the total approved credit for all applicants for one year exceeds the dollar cap, then the credit is prorated amongst applicants.
  • The prorated credit will be determined by dividing the credit for each individual taxpayer by the total approved credits for all taxpayers.  The resulting percentage will be multiplied by the credit cap.  The proration is done by the Heritage Council as part of their approval process.
  • Prior to April 30, 2010 a taxpayer could choose to use the credit or transfer the credit to an entity subject to the tax imposed by KRS 136.505.  On or after April 30, 2010 a taxpayer must make an irrevocable election to use the credit, which will be refundable, or transfer the credit.
  • Taxpayers should attach a copy of the authorization of credit from the KHC to their tax return when claiming the credit.

New section added to the Certified Rehabilitation Credit under KRS 171.3961

  • Effective for taxable years beginning on or after January 1, 2014.
  • Credit is against taxes imposed by Kentucky Revised Statutes 141.020, 141.040, 141.0401, or 136.505.
  • The credit is refundable and transferrable.
  • The credit is for completing a certified rehabilitation to a certified historic structure which is located
    1. within the jurisdiction of a consolidated local government or urban-county government; and
    2. within one-half (1/2) mile of a tax increment financing that has received at least preliminary approval.
  • The amount of qualified rehabilitation expenses exceeds fifteen million dollars ($15,000,000).
  • Substantial rehabilitation of the certified historic structure begins prior to July 1, 2015.
  • The total approved credit is available over a four-year period.
  • Credit amount: is limited to the first $30 million of qualified rehabilitation expenses, is equal to:
  • 30 percent of the qualified rehabilitation expenses in the case of owner-occupied residential property;  and
  • 20 percent of the qualified rehabilitation expenses in the case of all other property.
  • The maximum credit that may be claimed in a taxable year is 25 percent of the total approved credit; however, the total statewide credit is not subject to an annual cap.

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The Kentucky Department of Revenue conducts work
under the authority of the Finance and Administration Cabinet.