Federal Tax Credit Incentive Program

Louisiana- Division of Historic Preservation

Main Street

*SPECIAL NOTE*

GO Zone Tax Credit Information

On December 22, 2005, President Bush signed House Resolution 4440, the Gulf Opportunity Zone Act of 2005. Known as the GO Zone legislation, this resolution provided for economic development incentives for the areas of the country that were devastated by Hurricane Katrina in 2005.

Among the benefits offered in the legislation, provisions were made to increase current tax benefits for the rehabilitation of historic buildings, and non-residential buildings that were built before 1936. For the 31 parishes located in the GO Zone, this means that the Federal 20% Historic Rehabilitation Tax Credit will be increased to 26% for costs incurred from August 28, 2005 through January 1, 2009. The 10% Credit for income-producing buildings built prior to 1936 will be increased to 13% for the same period.

All previous requirements of the above-listed programs are still in effect.

The parishes that are in the GO Zone are as follows: Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Vermilion, Washington, West Baton Rouge, and West Feliciana.

The Louisiana Division of Historic Preservation administers a federal tax credit which encourages the restoration/rehabilitation/renovation of historic buildings located in Louisiana. Briefly, a tax credit is better than a deduction. A deduction merely lowers a taxpayer's taxable income, but a credit lowers his actual tax bill. Simply put, a $2,000 tax credit would decrease the amount of money a taxpayer owed to the Internal Revenue Service by $2,000.

The historic preservation tax credit is for 20% of the costs of renovations to a building (including labor, materials and architects/engineers fees). Thus, if an owner spent $100,000 restoring a historic building, he would get 20%, or $20,000, worth of tax credit. For every four dollars he puts into the project, the IRS would put in one dollar. In effect, it's like a 20% off sale for construction.

In cases where owners are not able to take the entire 20% credit in one year, these credits can be carried forward 20 years and/or amended back 1 year. Please consult your Certified Public Accountant.

Historic Rehabilitation Tax Credit

To be eligible for the 20% federal income tax credit on the cost of rehabilitating an income-producing building:

The building must be in a National Register historic district or individually listed on the Register.

The building must be historic (built before the end of the period of significance for the district).

It must still be recognizable as historic, not remodeled into something else.

You must follow federal guidelines on both the interior and exterior.

You must fill out the necessary forms and submit them to the Division of Historic Preservation. (See NPS link below for applications.)

24-36 "before" photos must be submitted with the Part 1 application.

You have to spend (on repairs) an amount of money equal to the purchase price minus the value of the land. If you have owned the building for several years, you must spend an amount equal to the present depreciated value.

(Place mouse over image to see remodel)

Maison Des Amis, a bed and breakfast inn in Breaux Bridge, Louisiana, was rehabilitated using the Federal Historic Preservation Tax Incentive Program.

If you have any questions, please contact the Tax Act Staff in the Division of Historic Preservation at:

(225) 342-8154 or
ksanders@crt.state.la.us

If you are unsure about the Register status of your building or whether it would be considered historic, send a photo and a map showing the location to:

Division of Historic Preservation
P.O. Box 44247
Baton Rouge, LA 70804

It is very important that our staff work with you from the very beginning of the process. Please call for an appointment as soon as you have access to the building.

Developers often use the Tax Credit Incentive Program to help finance large rehabilitation projects like the Jefferson Hotel in Caddo Parish. The Tax Act staff is available to assist with projects throughout the state.

What Properties Qualify:

To qualify, a building must be certified as a historic building in a National Register Historic District or must be individually listed in the National Register of Historic Places. Owners of historic buildings which are not currently on the Register may apply for Register listing through the Division of Historic Preservation by contacting the National Register staff at (225) 342-8160. The tax credit is restricted to income producing properties. In Louisiana houses, warehouses, office buildings, schools and motor companies have been rehabilitated as apartments, offices, bed and breakfasts, hotels, art studios and restaurants. Home offices and apartments in a private residences are eligible for credits on the basis of square footage.

Use of the Tax Credit Incentive Program is not limited only to developers and large commercial buildings. This New Orleans house, now a bed and breakfast, is a recent example of the program at work.

Other Requirements:

All work must meet the Secretary of the Interior's Standards for Rehabilitation, as reviewed by the Division of Historic Preservation and approved by the National Park Service. There are application forms for this purpose. (The Secretary's Standards are discussed in Louisiana's Historic Rehabilitation Tax Credit information booklet, which also includes copies of the application forms. Call the Division of Historic Preservation's secretary at (225) 342-8160 to request a copy. The Standards for Rehabilitation, Illustrated Rehabilitation Guidelines, and Certification Applications are also available online. (See link to NPS website below).

The project cost must equal the adjusted base value of the building: the purchase price minus the appraised value of the land. For buildings owned a number of years, the adjusted base value is the depreciated value on last year's income tax return.

Projects have 24 months for costs to meet the adjusted base value. Projects may have 60 months IF applications are submitted in advance.

The Division of Historic Preservation is available, immediately after the purchase of a property, to meet with the owner, contractor and/or architect to discuss meeting the Standards and to clarify the application process. An owner who is only just considering a project should call the Division's secretary at (225) 342-8160 and request the Historic Rehabilitation Tax Credit information booklet.

The Tax Credit Incentive Program has been used quite successfully in New Orleans to rehabilitate housing for low income residents.
(Uptown Historic District, Orleans Parish)

Other Things to Note:

It is best for an owner not to start construction until after the Part 2 application has been approved. If work is begun without an approved application, the owner proceeds at his own risk.

Photos are very important; 24-36 "before" photos (both interior and exterior) are needed to complete the Part 1 application.

Potential Areas of Concern:

If your project plans include the following, it is especially important to consult the Division of Historic Preservation before work begins:

Window repair, replacement and/or tinting
Rooftop additions
Other building additions
Storefront designs
HVAC and ductwork

For more information or to begin the application process, please contact:

Tax Act Staff
Division of Historic Preservation
P. O. Box 44247
Baton Rouge, LA 70804
(225) 342-8154
ksanders@crt.state.la.us

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