Federal Historic Tax Credit May Be Cut Under Trump's Tax Plan
Though much of the commercial real estate industry breathed a sigh of relief when President Donald Trump’s new tax reform bill was revealed, the future of one provision is still in question.
Both the like-kind 1031 exchange and the carried interest tax break were retained under the bill, but the Federal Historic Tax Credit is at risk of being cut.
Under the tax, more than $131B in private investments have been made to preserve upward of 42,000 historic buildings throughout the country, creating close to 2.5 million construction jobs across the country, CoStar reports.
The initial bill that passed through the U.S. House of Representatives called for a complete removal of the 20% tax credit, which is provided for the rehabilitation of historic, income-producing buildings — so long as they have been certified as historic structures by the National Park Service.
In the past, the tax credit has been used to complete renovations on buildings like the Wrigley Building in Chicago and the Old Post Office in Washington, D.C.
If the tax credit is cut, it could endanger the restoration of buildings and landmarks across the country, as well as thousands of construction jobs for those involved in the rehabilitation projects. This could also lead to states filling the gap with their own tax incentives, a scenario that could spell trouble for states coping with budget issues, CoStar reports.
Early this month the Senate Finance Committee passed an amendment to retain the tax credit, though new rules would mean it would have to be claimed over a five-year period.
The legislation is expected to head to the Senate for a hearing this week.