As with the 20% rehabilitation tax credit, the 10% credit applies only to buildings—not to ships, bridges or other structures. The rehabilitation must be substantial, exceeding either $5,000 or the adjusted basis of the property, whichever is greater. And the property must be depreciable.

The 10% credit applies only to buildings rehabilitated for non-residential uses. Rental housing would thus not qualify. Hotels, however, would qualify. They are considered to be in commercial use, not residential.

A building was moved after 1935 is ineligible for the 10% rehabilitation credit. (A moved certified historic structure, however, can still be eligible for the 20% credit.) Furthermore, projects undertaken for the 10% credit must meet a specific physical test for retention of external walls and internal structural framework:

• at least 50% of the building’s walls existing at the time the rehabilitation began must remain in place as external walls at the work’s conclusion, and



• at least 75% of the building’s existing external walls must remain in place as either external or internal walls, and



• at least 75% of the building’s internal structural framework must remain in place.

Claiming the 10% Rehabilitation Tax Credit

The tax credit must be claimed on IRS form 3468 for the tax year in which the rehabilitated building is placed in service. There is no formal review process for rehabilitations of non-historic buildings.

The 10% or 20% Credit: Which One Applies?

The 10% rehabilitation tax credit applies only to non-historic, non-residential buildings built before 1936. The 20% rehabilitation tax credit applies only to certified historic structures, and may include buildings built after 1936. The two credits are mutually exclusive. Only one applies to a given project. Which credit applies depends on the building—not on the owner’s preference.

Buildings listed in the National Register of Historic Places are not eligible for the 10% credit. Buildings located in National Register listed historic districts or certified State or local historic districts are presumed to be historic and are therefore not eligible for the 10% credit. Owners of buildings in these historic districts may claim the 10% credit only if they file Part 1 of the Historic Preservation Certification Application with the National Park Service and receive a determination that the building does not contribute to the district and is not a certified historic structure. Owners of historic buildings denied certification for the 20% credit may not claim the 10% credit.