Historic Rehabilitation Tax Credits
Tax credits encourage the preservation and continued use of historic buildings by offering economic incentives for their rehabilitation. The Louisiana Division of Historic Preservation administers two historic rehabilitation tax credit programs for income-producing buildings: the Federal 20% Historic Rehabilitation Tax Credit Program and the 20% State Commercial Tax Credit Program.
These programs have helped preserve many historic buildings throughout Louisiana. They not only offer an incentive to preserve historic buildings, but also act as a major force in economic development. The use of tax credits encourages private sector rehabilitation of historic buildings and is one of the most successful and cost effective community revitalization programs. These programs generate jobs and create commercial, residential, and industrial spaces within historic buildings.
A tax credit is a direct, dollar for dollar, reduction in the amount of money a taxpayer must pay in taxes for a given year. For example, if a taxpayer owes $5,000 in taxes to the Internal Revenue Service or Department of Revenue, but has a $3,000 credit, he only pays $2,000. Thus he pockets the $3,000 he would otherwise have to pay in taxes. A credit is much better than a deduction which merely reduces a taxpayer’s income and puts him in a lower tax bracket.
Time and time again, we hear that these programs make the numbers work for development projects. Louisiana is consistently one of the top ten performing states in the nation, both for the number of historic rehabilitation projects completed and dollars leveraged. To date, historic rehabilitation tax credits have leveraged more than $3.7 billion in investment in historic properties in Louisiana alone.
Both of these optional, yet restrictive programs listed below are administered by the Louisiana Division of Historic Preservation. Each program may be used independently, but there are certain instances where both programs may be used together, sometimes referred to as twinning or stacking.
Restoration Tax Abatement Program for Improvements to Structures
When renovation has not yet begun, five-year property tax abatement on improvements to structures is available, with a five-year option for renewal. Existing structures in downtown, historic, or economic development districts are eligible. Spanish Town and Beauregard Town are included. Approval must be obtained from the State Board of Commerce and Industry and the East Baton Rouge Metropolitan Council. The Restoration Tax Abatement Program is administered by Louisiana Department of Economic Development. Contact Becky Lambert at Becky.Lambert@la.gov or (225) 342-6070 for additional information and eligibility requirements.
Federal Historic Rehabilitation Tax Credit
A 20% federal income tax credit is available for the rehabilitation of historic, income-producing buildings that are determined by the National Park Service to be "certified historic structures." The Division of Historic Preservation and the National Park Service review projects to ensure their compliance with the Secretary of the Interior's Standards for Rehabilitation. The Internal Revenue Service defines qualified rehabilitation expenditures on which the credit may be taken. The Federal Historic Rehabilitation Tax Credit Program is administered by the Division of Historic Preservation located within the Louisiana Department of Culture, Recreation, and Tourism. Please contact the CRT tax incentive program staff at (225) 342-8160 for additional information and eligibility requirements.
In addition to the aforementioned incentives, the Downtown Development District is currently working with the City of Baton Rouge, Baton Rouge Area Chamber, Louisiana Economic Development and private sector partners to design new incentives for downtown development. Stay tuned for new updates and announcements regarding economic incentives for Downtown. For additional information contact the Downtown Development District at DDD2@brgov.com or (225) 389-5520.