The Rehabilitation of Historic Structures Tax Credit, Explained

Is your business in a Louisiana Downtown Development or Cultural District? You could qualify for a significant tax credit.

Deciding where to situate your business is one of the most important choices you can make. From visibility, to customer accessibility, to the presence of a qualified labor market, the spot you choose to hang your shingle will have a major impact on the growth and longevity of your enterprise. 

But for entrepreneurs situated within a Louisiana Downtown Development or Cultural District there’s another factor to consider: whether the building your business occupies could qualify for a Louisiana State Rehabilitation of Historic Structures Tax Credit. If it does, the benefits can be significant. Here’s how it works.

What Kinds of Rehabilitation Projects Qualify?

“The Louisiana Rehabilitation of Historic Structures tax credit is a state commercial income tax credit designed to revitalize neighborhoods by putting buildings back into commerce, so they can benefit their communities,” explains Dare Powers, Director of Tax Incentives for Didier Consultants, Inc., a tax consulting company based in Zachary. Founded and operated by St. Francisville residents Dare Powers and Belton Didier, Didier Consultants operates the largest Louisiana tax incentive practice in the state, and the couple remains deeply involved in the St. Francisville community. 

Powers explains that to qualify, a building must be non-residential real property or residential rental property; 50 years old or more; and be located in a designated downtown development or cultural district. Once a building qualifies for the program, Powers notes that its owners can receive a tax credit equaling up to 20% of the value of eligible costs and expenses associated with the building’s rehabilitation. 

So, if a business owner invests $100,000 in the cost of rehabilitating a building, they could receive a $20,000 tax credit to offset the business’s taxable income during the year in which the project is completed. 

The Rehabilitation of Historic Structures tax credit is one of the few credits that a company can sell or broker, Powers notes. 

“If you don’t need those credits you can sell them at 80 cents on the dollar,” she says. “Given that this is one of the few marketable credits, there’s always a lot of demand.”

How to Qualify

The Rehabilitation of Historic Structures Tax Credit is administered through the Louisiana State Historic Preservation Office (SHPO)—a division of the state’s Department of Culture, Recreation, & Tourism. To be eligible, a rehabilitation project has to preserve the building’s original form as much as possible, although SHPO will work with the architect to accommodate contemporary systems and modern requirements. 

“It’s a three-step process,” says Powers, explaining that the SHPO requires architectural plans to be submitted before rehabilitation work begins. 

Once the office is satisfied that plans meet program guidelines, it will sign off on the project and work can begin. After project completion the SHPO will perform an inspection and certify the rehabilitation. Then the application for credit will be approved by the Louisiana Department of Revenue and the tax credit issued. 

To learn more about the Rehabilitation of Historic Structures tax credit, speak to your CPA or tax consultant, or click HERE.  

For a list of Louisiana Downtown Development Districts click HERE. For a list of Louisiana Cultural Districts click HERE. To learn more about financing a historic structure rehabilitation project, click HERE. 

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