Historic Tax Credit: Changes Proposed to Make it More Accessible, Attractive

On March 2, 2023, Senators Cardin (Maryland), Cassidy (Louisiana), Cantwell (Washington), and Collins (Maine) reintroduced the Historic Tax Credit Growth and Opportunity Act (HTC-GO). This legislation was originally proposed back in 2021. HTC-GO has many beneficial proposed changes to the current historic tax credit program.

The four proposed permanent provisions are:

  • 30% tax credit increased from the current 20% tax credit based on qualified rehabilitation expenditures (QREs) for projects that cost less than $3.75 million. For projects over $3.75 million, the existing 20% tax credit is preserved.
  • Elimination of the basis-adjustment requirement for tax depreciation purposes. The proposed changes will be more in line with other tax credit programs such as the Low-Income Housing Tax Credit (LIHTC).
  • Decrease in the substantial rehabilitation test from 100% down to 50% in relation to the pre rehabilitation cost of the building.
  • Making projects by nonprofits easier to accomplish.

The above proposed changes will certainly make the historic tax credit more accessible with the decrease in the substantial rehabilitation test as well as more interest from potential investors due to the increase in credit percentage and the elimination of the basis adjustment for tax depreciation purposes.

Community Development Corporations (CDCs), commercial real estate, and affordable housing developers interested in the historic tax credit are encouraged to monitor the legislation as it gets reintroduced to the House of Representatives.

AAFCPAs will continue to monitor emerging legislation and provide insight to you as appropriate. If you have any questions, please contact Matthew McGinnis, CPA at mmcginnis@nullaafcpa.com, 774.512.4080; or your AAFCPAs Partner.

About the Author

Matt has been serving AAF clients since 2006. Matt has extensive experience auditing and consulting with nonprofit organizations in accordance with Uniform Guidance/Single Audit and Government Auditing Standards, as well as those with Massachusetts Uniform Financial Statement filing requirements. Matt’s experience within the not for profit industry includes: affordable housing, community development, charter schools and human services organizations. Matt’s for-profit clients include both commercial and residential real estate projects. Matt specializes in various tax credit deals such as Low Income Housing Tax Credit (LIHTC) and New Markets Tax Credit (NMTC) programs.