The Commercial Historic Preservation Tax Credit (based on House Bill 14-1311) is a tax credit for owners of designated commercial properties that do a certified rehabilitation of their property. This program is jointly administered by OEDIT and History Colorado. The program is now accepting applications for both large and small rehabilitations. Owners with eligible projects are encouraged to apply.

Current Program Status

Fact Sheet

Program Manual

Program Schedule

Applications are currntly being accepted. Credits will be reserved starting in January 2016. Credits will be issued starting in July 2016.

Requirements and Eligibility

This tax credit is available to the owner of a certified historic structure who performs a certified rehabilitation on their property. The owner must meet one of the following criteria:
  • Holds title to a qualified structure
  • Holds prospective title to a qualified structure in the form of a purchase agreement
  • Holds prospective title to a qualified structure in the form of an option to purchase
  • Holds a leasehold interest in a qualified commercial structure for a term of not less than 39 years

A certified historic structure is defined as a property located in Colorado that has been certified by History Colorado. A certified rehabilitation is defined as repairs or alterations to a certified historic structure that have been certified by History Colorado as meeting the standards for rehabilitation of the US Secretary of the Interior.  

 
Application Process

Major steps in the application process:

  • The owner of a historic structure fills out an initial qualifying questionnaire to make a preliminary determination of eligibility.
  • The owner submits an application and rehabilitation plan to OEDIT for a tax credit on the rehabilitation.
  • The application and rehab plan are procecessed.  If the application and plan are substantially complete, a tax credit is reserved for the owner.
  • Actual rehab might have already started. If not, rehabilitation must commence in 12 months. Owner must submit ongoing proof of construction.
  • OEDIT and History Colorado will formally review the application.
  • Upon completion of construction, owner must apply for credit and submit documentation for final review.
  • OEDIT and History Colorado review the final documentation and upon approval, issue the tax credit certificate.
  • The owner may use the tax credit for their own tax liability, or they may sell the tax credit to a third party.

This is an online application. The rehab plan is a complete construction plan that includes schedule, blueprints, etc.

Since there are limits on the total credits the program can reserve each year, applications will be processed on a first come, first served basis. If multiple applications/rehab plans are received on the same day, a lottery process will determine the order in which they will be reviewed and reserved.

There are two fees associated with this tax credit. The first is an application fee, which is expected to be $500 when the estimated credits is over $250,000 (if the estimated credit is less than or equal to $250,000, no application fee will be charged). The application fee is charged when the application and rehab plans are submitted. The second fee is the issuance fee, which is charged when the credit is finally issued. This fee is expected to be 3% of the amount of the tax credit issued. Both of these fees must be paid directly to OEDIT, they cannot be deducted from the tax credit.

 

Program Reservation Limits

The 2014 Commercial Historic Preservation Tax Credit categorizes the rehabilitations based on the estimated expenditures, and limits the dollar amount of credits that can be reserved in any given calendar year. Reservations will be limited based on the following table:

Expenditure Category

2016

2017

2018

2019

Estimated rehab expenditures of $2,000,000 or less

$2,500,000

$5,000,000

$5,000,000

$5,000,000

Estimated rehab expenditures over $2,000,000

$2,500,000

$5,000,000

$5,000,000

$5,000,000

Credits are limited on the dollar amount reserved. There is no limit to the number of credits that can be reserved or issued. 

OEDIT has the discretion to move unused credits between categories and into subsequent years.

Each property is limited to $1 million in credit in any one calendar year. Owners may apply for credits on multiple properties.

 

Calculating the Credit

The tax credit is calculated as a percentage of the actual qualifying rehabilitation expenditures. The percentage applied depends on two things: the actual amount of rehab expenditures and whether the structure is located in a recognized disaster area or not.

The following rates apply:

 

Regular Area

Disaster Area

First $2 million of Actual Rehabilitation Expenditures

25%

30%

Any Rehabilitation Expenditures over $2 million

20%

25%

These percentages are added together, so a property not in a disaster area with $3 million in actual rehab expenditures would be eligible for a tax credit of $700,000 ($500,000 for the first $2 million, plus $200,000 for the amount over $2 million). The tax credit is based on the amount of actual qualifying expenditures, even though the reservation is based on the estimated expenditures.

Owners can apply for multiple properties, but there is a limit of $1 million per year on any given property.

The initial credit issued cannot be more than the amount of credit reserved. If actual qualifying expenditures exceed the amount reserved, the owner must apply for the difference, and (subject to annual limits and property limits) will be awarded a second tax credit certificate for the excess amount. If the actual rehab expenditures are less than the amount reserved, the tax credit issued will be calculated on the actual amount.

 

Applying for the Credit

In order to apply for the credit, an applicant must first set up an account with OEDIT.  After the account is created, the applicant needs to log in and go to the "Apply" screen and click on "Historic Preservation Tax Credit Qualification".  This will take the applicant through the qualification questionnaire.  Once that is filled out, the applicant will fill out the full application.

Create Account

Apply for Tax Credit

 

Using the Credit

The tax credit is a credit against Colorado income taxes. The credit is issued to the owner of the property when construction is complete and approved. The credit can be carried forward ten years, and any unused portion of the credit can be sold to third parties. If the owner chooses to sell the credit, both the owner and the purchaser of the credit must coordinate their transaction through the OEDIT website. After ten years, any unused and unsold credit will expire and cannot be refunded.

 

Other Programs

Participants in the Historic Preservation Tax Credit are encouraged to also participate in other OEDIT programs. Participating in the Historic Preservation Tax Credit does not limit your participation in most other state programs. Programs of interest:

For information on the 2014 Residential Historic Preservation Tax Credit, click here. For information on the 1990 Historic Preservation Tax Credit, click here