Investment Tax Credit Program
Since this program began, more than 42,000 buildings have been rehabilitated across the country, generating over $84 billion in private investment in historic buildings nation-wide. In Tennessee, buildings of almost every type imaginable have benefited from the Investment Tax Credit (ITC) program, from Bed and Breakfasts and hotels and shotgun houses to large-scale business developments. Today, over 1,000 buildings in Tennessee have been rehabilitated using the ITC program, generating over $1 billion in investments in Tennessee's historic buildings.
Two recent Investment Tax Credit projects are the Nineteenth Century Club/Rowland J. Darnell House in Memphis (left) and the Fire Hall for Engine Company No, 18 in Nashville (right)
There are two types of ITCs available: 20% for a certified historic structure or 10% for a non-historic structure. Investment Tax Credits are available to the owners or certain long-term renters of income-producing properties.
The 20% ITC reduces the cost of restoration and rehabilitation to the owner of an income producing historic property as an income tax credit. The credit is 20% of what an owner spends rehabilitating the building, not including acquisition costs.
To qualify for the 20% Credit:
The building must be listed on the National Register of Historic Places, or listed as a contributing structure within a National Register Historic District.The rehabilitation project must meet the "substantial rehabilitation test," which means you must spend the adjusted value of the building or $5000, whichever is greater. The figure is derived by subtracting the value of the land from the cost of the building and land together.After rehabilitation, the structure must be income producing for five years (commercial, rental, B&B).The rehabilitation must meet The Secretary of the Interior's Standards for Rehabilitation and Guidelines for Rehabilitation of Historic Buildings.
To qualify for the 10% credit:
- The structure must have been built before 1936 and not "historic" (must not be listed or eligible for listing on the National Register of Historic Places).
- The structure must retain 50-70% of external walls and 75% of internal walls.
- The rehabilitation must meet the "substantial rehabilitation test" as in the 20% credit.
- The structure must be used for five years as income producing but NOT housing.
Please note: The Tennessee Historical Commission (THC) does not give tax advice. It is recommended that you consult with your accountant AND with the ITC Coordinator at the THC BEFORE you begin work on your project.
Examples of rehabilitation projects using the Investment Tax Credit program:
- Nineteenth Century Club/Rowland J. Darnell House, Memphis
- Fire Hall for Engine Company No. 18, Nashville
- Farmers Exchange, Johnson City
- Jackson Terminal, Knoxville
- James Lee House, Memphis
- Municipal Public Works Garage/Bus Barns, Nashville
- Hotel Chisca, Memphis
- Newcomers Pharmacy, Knoxville
For additional general information on the Investment Tax Credit program, see the National Park Service's ITC web-site at https://www.nps.gov/tps/tax-incentives.htm
To receive an application and instructions for the ITC program, use the contact below.