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HISTORIC
Rehabilitation
Tax Credit |
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 Section
47 Rehabilitation Tax Credit
The
Rehabilitation Tax Credit, which is contained in Internal Revenue
Code Section 47, was created to provide an incentive for community
revitalization of historic properties. The current program incentives
include a 20% tax credit for the rehabilitation of historic structures
and a 10% tax credit for rehabilitation of non-historic, non-residential
buildings built before 1936. The credit is generated in one year,
but the property must stay in its rehabilitated form for a period
of 5 years. Qualified projects include residential, commercial and
industrial projects, but exclude private residences.
Many investors view the Rehabilitation Tax Credit as very attractive
because of its immediate impact. As a one year credit, the return
on investment is immediate, not spread over a longer period of time.
Additionally, Rehabilitation Tax Credits can be combined with LIHTC's
to further assist in the financing of a project and creating an investment
vehicle with a very attractive rate of return.
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