IRS Tax Credits for Older Buildings

If you have ever had doubts about buying an older building because of the maintenance costs associated with it, consider this: The IRS offers a substantial tax credit for landlords who buy certain older or historic buildings.

The Rehabilitation Tax Credit is available for qualified purchases and applies to the costs of renovation and reconstruction of specific buildings. The credit includes renovation, restoration and reconstruction, but does not include new construction or enlargement of the original structure.

Currently, the IRS allows the following; a 10 percent credit for the restoration of non-historic buildings built before 1936, and a 20 percent credit for the restoration of a Certified Historic Structure.

Note: Certified Historic Structures are listed on the National Register of Historic Places, located in a Registered Historic District or determined to be of significance to the Historical District or community.

The rehab credit is generally given in the taxable year in which the property is placed in service. This means, when the entire property (or a portion thereof) is available to be rented.