Although signed into law by Governor Tom Corbett on July 2, 2012 as part of the Historic Preservation Incentive Act, Pennsylvania’s Historic Preservation Tax Credit is relatively unknown to most taxpayers. Applications for the credit were accepted for the first time on May 1, 2014.
The Act provides for a state tax credit of up to 25% of the project’s qualified expenditures, limited to $500,000 per taxpayer, for the rehabilitation of qualified income-producing buildings. This credit can be claimed in conjunction with the federal historic tax credit. By leveraging both the state and federal programs, taxpayers can recognize substantial tax savings on their annual tax filings.
The Pennsylvania Historic Preservation Tax Credit borrows many provisions from its federal counterpart, including the requirement for a qualified rehabilitation plan. The taxpayer must submit a qualified rehabilitation plan for a qualified historic structure to Department of Community and Economic Development (“DCED”) to be approved by the Commission. Photographs, estimated costs, architectural drawings and evidence of historic structure status are all expected to be part of this submission.
The Pennsylvania credit can be applied against personal income tax, corporate net income tax, capital-stock franchise tax, and various other industry-specific state taxes. While there does not appear to be a specific deadline for submitting an application, there is a $3,000,000 annual limit set by the DCED. Tax credit recipients are awarded on a first-come, first-serve basis. As a result, any taxpayers interested in applying for this credit are urged to do so as soon as possible.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.