Government agencies are encouraging private sector involvement in the preservation of historic properties, largely through tax credits and other financial incentives. In many areas of the United Sates, dormant historic buildings have been renovated, often providing the property owners higher occupancy rates and improved lease revenues.
Commercial and residential tenants are in the market for unique space that affords easy access to work and cultural resources. Backroads Capital Partners help savvy property owners capitalize on this trend with strategic advice and expertise that provides project financing through federal and state historic tax credits. Our professionals have longstanding national experience in real estate and tax policy matters, and understand the competing interests of all parties when dealing with historic tax credit properties.
Backroads Capital Partners helps property owners, developers, and investors reap the long term financial benefits afforded through historic tax credits. Our specialists provide the unique knowledge and experience required to realize the potential financial benefits of this complex area of the industry.
Historic Tax Credit Requirements and Services
The 20% federal rehabilitation tax credit program began in 1976 to reward private investment in the rehabilitation of historic properties. To qualify for the tax credit, several project requirements and criteria must be met, including:
- The historic building must be listed on the National Register of Historic Places or be certified as contributing to the significance of a “registered historic district.”
- Once rehabilitated, the building must be used for an income-producing purpose for at least five years.
- The project must meet the “substantial rehabilitation test”, meaning that the cost of the rehabilitation must exceed the pre-rehabilitation cost of the building.
- The rehabilitation work must be completed according to the Secretary of the Interior’s Standards for Rehabilitation.
Backroads Capital Partners will ensure that all historical tax credit requirements are met and the maximum financial benefit is realized through a comprehensive suite of services that include:
- Determining which rehabilitation expenditures qualify for historic tax credits, and then developing the appropriate financing options
- Reviewing, analyzing and evaluating transactions to mitigate the risk of tax credit recapture and reallocations to preserve the transaction integrity before the IRS
- Applying the most current and comprehensive strategies to accomplish the most efficient tax credit transaction
- Developing transaction structures to maximize tax credits and equity proceeds
- Providing current market analysis and strategic insight into evolving tax-credit trends
- Preparing financial projections for the developer that reflect the agreed upon deal terms