Historic Preservation Tax Credits for Income-Producing Historic Buildings
Owners of historic income-producing properties in Wisconsin may be eligible for two income tax credits that can help pay for their building's rehabilitation. The Wisconsin Historical Society's Division of Historic Preservation and Public History administers both programs in conjunction with the National Park Service (NPS).
Tax credit programs
- Federal Historic Preservation Credit: Returns 20 percent of the cost of rehabilitating historic buildings to owners as a direct reduction in their federal income taxes.
- Wisconsin Supplemental Historic Preservation Credit Returns an additional 5 percent of the cost of rehabilitation to owners as a discount on their Wisconsin state income taxes. Owners that qualify for the Federal Historic Preservation Credit automatically qualify for the Wisconsin supplement if they get NPS approval before they begin any work.
To qualify for the Federal Historic Preservation Credit, a property owner must:
- Own a historic building. A building is considered "historic" if it is listed on the National Register of Historic Places or if the NPS determines that it contributes to the character of a National Register historic district. A building can also receive a preliminary determination of eligibility for the Register from the NPS through the tax credit application process. The owner must later formally list the property on the National Register.
- Use the building for income-producing purposes. Income-producing buildings are those used in a trade or business or for the production of rental income.
- Formally apply to the Wisconsin Historical Society. Application materials can be obtained through the Society or through the NPS Web site. Completed applications are submitted to the Society. The applications will then be forwarded to the NPS with recommendations. The NPS charges a fee for their review. Owners should allow 60 days, from the date they submit their complete applications, for complete project review.
- Rehabilitate the building following program standards. Program standards are the Secretary of Interior's "Standards for Rehabilitation." The NPS, in conjunction with the Society, determines if a project meets the standards.
- Spend a minimum amount on the rehabilitation.
An owner must spend at least an amount equal to the building's depreciated value or $5,000, whichever is greater. This amount of money must be spent in a two year period. Phased projects are allowed a five-year period.
- Claim the credit for only eligible expenses. The cost of all work on the historic buildings, inside and out, is eligible for the credit. The cost of site work, such as landscaping or paving, and the cost of work on non-historic additions are not eligible expenses.
- Maintain ownership of the building and maintain the building's historic character for five years. The tax credit must be repaid to the IRS and to the Wisconsin Department of Revenue (DOR) if the building is sold or altered in a way that diminishes its historic character. Repayment is pro-rated over the five year period after the building is placed in service.
This summary is not intended to cover all program rules and guidelines. Additional information can be obtained through the National Park Service.
While the goal of the program is to preserve significant buildings, it is also an income tax program and so must meet IRS and DOR requirements. Before you apply, we suggest you talk to your accountant to see if the program will work for you.
We strongly recommend you read through the program requirements noted below.
Program and Application Requirements
National Park Service Documents