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Federal Historic Tax Credit Deadline Extensions

The Internal Revenue Service (IRS) recently granted an extension due to the COVID-19 pandemic for Federal Historic Tax Credit applicants to meet certain time requirements to obtain the credit. As with many industries, social distancing and stay at home requirements slowed the progress of Historic Tax Credit project construction and the ability to meet deadlines required by the tax law to claim these credits. The extension provides additional time for complying with the Historic Tax Credit projects timelines, which will ultimately play a large role in the economic outcomes of these projects.

How Do You Qualify?

For Federal Historic Tax Credits, a building must have been substantially rehabilitated in order to qualify. A building is treated as substantially rehabilitated only if the Qualified Rehabilitation Expenditures during the 24-month period (or a 60-month period if selected by the taxpayer) exceed the greater of the taxpayer's adjusted basis in the building (and its structural components) at the beginning of the period, or $5,000. This period of time is referred to as the “measuring period.”

If the measuring period originally ended on or after April 1, 2020, and before March 31, 2021, then the last day of the measuring period is postponed to March 31, 2021. This means that a taxpayer may ultimately have a measuring period that is longer than the IRS prescribed 24 (or 60) months, and therefore additional time to meet the substantial rehabilitation test.

For more information, or to answer questions regarding your specific situation or any real estate credit issues, please reach out to one of our Bonadio Real Estate Industry leaders today.

The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We, therefore, make no warranties, expressed or implied, on the services provided hereunder.