Tax Incentives - Income-Producing
Taxpayers who rehabilitate their income-producing historic buildings may be eligible for a number of Federal and State historic rehabilitation tax credits. To take advantage of the federal and state programs, the building must produce income, the building must be designated historic, the rehabilitation costs must be substantial – exceeding the adjusted basis, and the way the work is done must be compatible with the historic building. For more information please see our Income-Producing FAQ and Tips Sheet (PDF).
20% Federal Historic Rehabilitation Tax Credit: Owners and some lessees of historic buildings used to produce income may be eligible for a federal income tax credit equal to 20% of their rehabilitation costs.
State Historic Rehabilitation Tax Credit: In South Carolina, taxpayers who qualify for the 20% federal income tax credit may also qualify for a state income tax credit of 10% or an optional 25% (not to exceed $1 million for each certified historic structure) of their rehabilitation costs under the South Carolina Historic Rehabilitation Incentives Act (SC Code of Laws Section 12-6-3535).
Applicants must complete the three part federal Historic Preservation Certification Application (HPCA) and provide two copies to the State Historic Preservation Office (SHPO). No separate application is necessary to apply for the state income tax credit on income-producing projects – if the applicant is eligible for the federal credit then the applicant is eligible for the state credit. The SHPO uses the HPCA to consult with owners and provide comments to the National Park Service (NPS). NPS uses the HPCA as the basis for their review in the official certification process.
Please visit the National Park Service’s website for the Historic Preservation Certification Application forms and instructions. NOTICE: NPS has issued updated application forms and instructions dated 2019. The 2016 application forms will not be accepted after FEBRUARY 26, 2021.
H. 3485 (Act 172) was signed by Governor Henry McMaster on September 29, 2020. The Act amended Section 12-6-3535, Code of Laws of South Carolina, 1976, to provide that a taxpayer claiming the credit must pay a preliminary and final fee to the Department of Archives and History for the State Historic Preservation Grant Fund.
H. 5150, the General Appropriations Bill for FY 22-23 contains proviso 117.170 (GP: Historic Preservation Certification Fee), which states: “For the current fiscal year, the requirements of Section 12-6-3535(G) are suspended.” Section 12-6-3535 (G) is the section that established the preliminary and final fee.
Therefore the Department of Archives and History will suspend collection of preliminary and final fees for applications received during FY 22-23 (July 1, 2022 – June 30, 2023).
Incentives is a comprehensive web guide to all aspects of the federal program from the National Park Service that includes more detailed information on the review process, how to apply the Standards for Rehabilitation to your project, and how to avoid incompatible work. See links to specific pages below:
- Program essentials
- Application basics
- The review process
- Meeting the Standards for Rehabilitation
- Avoiding incompatible work
IRS FAQ - Includes answers to questions relating to the IRS code
IRS - Rehabilitation Tax Credit - Real Estate Tax Tips
Preservation Hotline #11: Tax Savings for Owners of Historic Buildings (PDF)
Tips on How to Apply for Mixed Use Projects (PDF)
Tips for Developers of Textile Mill Projects in South Carolina (PDF)
HPCA Part 1 Checklist (PDF)
For questions about compiling your tax application please contact Christopher Tenny, 803-896-5638
This website does not provide legal, tax or accounting advice; the information provided is intended to be general in nature; and visitors to the website are strongly encouraged to consult their own professional tax, accounting and legal advisors on individual tax matters, or consult the SC Department of Revenue or the Internal Revenue Service (IRS). The SHPO is not responsible for the information or advice provided here as it may affect the specific tax consequences to any individual (including sole proprietor), corporate, partnership, estate or trust taxpayer, which will depend on many other facts and circumstances. The information is for the general benefit of persons interested in obtaining certifications from the SHPO that may allow them to qualify for federal and/or state historic income tax credits. Given the frequency of changes in federal and state tax laws, regulations and guidance, the information represents a good faith effort to reference controlling laws and regulations as accurately as possible.