Historic Preservation Landmark Income Tax Credit Application Colorado Historic Preservation Income Tax Credit Application A General Information In 1990, the Colorado Legislature passed the Colorado Historic Preservation Income Tax Credit (CRS 39-22-514) to encourage the rehabilitation of privately owned historic buildings in the state. In 1999, the Colorado Legislature saw fit to extend the program through the year 2009 and to make some changes to the 1990 legislature. As describes in the summary of tax savings below, the tax credit incentives can be significant for preservation, especially for smaller projects that may not be eligible for other incentive programs. In Denver, the Denver Landmark Preservation Commission reviews applications for tax credits. Project Qualifications To qualify for the tax credit, several requirements must be met: 1. The property must be designated: either listed in the State Register of Historic Places or designated as Denver Landmark; if in a district, the property must be rated as contributing. Work cannot begin until the Landmark Preservation Commission has approved the project preliminary application. 2. The proposed project must meet the minimum qualifications: -Involve physical preservation such as rehabilitation and code compliance -Cost over $5,000 -Meet historic preservation standards -Be completed within 24 months, one 24-month extension may be obtained. 3. Exterior alterations to Denver Landmarks must also receive design review approval. The review and approval of design review and preliminary tax credit applications may be completed at the same time. Most projects that involve rehabilitation and health and safety code improvements quality for the tax credit as long as the requirements stated above are met. All hard costs associated with physical preservation (demolition, carpentry, sheet rock, plaster, painting, ceilings, doors and windows, fire sprinkler systems, roofing, flashing, exterior building cleaning, etc.) qualify. However, several types of projects do not qualify:
1. Routine improvements or periodic maintenance due to normal wear and tear. 2. Redecorating. 3. Architectural, engineering, interior design, or appraisal fees or other soft costs. 4. Acquisition costs. 5. New additional or enlargements. 6. Landscaping, excavating, or site work. 7. Repairs to additions added after a structure or district was designated. Preliminary Approval The process for obtaining preliminary approval is: 1. Call the Denver Planning Office to find our if your property is designated as a Denver Landmark or listed in the State Register. 2. Review the application materials to make sure your project qualifies. 3. Submit design review application for exterior alterations (Denver Landmark only) for design review approval prior to or concurrently with tax credit application. 4. Submit a completed Preliminary Application (Part 1) with the preliminary application fee of $250 (non-refundable). The reviewing entity may waive the application fee for smaller projects under $15,000. Projects over $15,000 will have a preliminary project site review by preservation staff. The review will proceed more quickly if your application is: -Thorough: clearly explains all of the interior and exterior modifications. -Complete: includes supplemental materials (photographs and drawings) to show existing conditions and the proposed work. Photographs must be labeled and referenced in the project description. -Legible: typed, printed, or computer simulated. 5. Once a complete application is accepted, the review for approval will be Completed within two weeks and approval at a regular meeting of the Landmark Preservation Commission.
6. Applications will be contacted after the 1st or 3rd Tuesday meeting of the Landmark Preservation Commission IF the Commission DOES NOT approve the proposed project. If the application is not contacted, work may begin the Wednesday following the Landmark Preservation Commission meeting.
Final Approval The last step is to obtain final approval once the work is completed. The final application (Part II) is intended to demonstrate that all of the work items proposed in the preliminary application have been completed as described. Photographs, to the extent possible should be the same view as the “before” picture to clearly show the work that was done. Further, a final site walk through by preservation staff to view the completed work may be required before Commission approval is sought. Final application fees submitted with the final application are: -No additional fee for projects costing $15,000 or less. -$250 additional fee for projects costing $15,001 to $50,000 -$500 additional fee for projects costing $50,001 to $100,000 -$750 additional fee for projects costing over $100,000 Once the Landmark Preservation Commission has reviewed and approved the final application, you will receive the Certificate and Verification forms in the mail.
Summary of Tax Savings The Historic Preservation Income Tax Credit makes available a 20 percent credit of qualified rehabilitation costs up to a maximum credit of $50,000 per qualified property. A tax credit directly reduces income taxes owned to the state. The available credit can be carried forward ten years. For any tax year, the reduction in taxes is at maximum equal to the applicants annual state income tax. Any remaining tax credits that have not been utilized after the tenyear eligibility cycle are no longer available. Tax credits can be taken by the owner of a property or by a tenant with a lease of ten or more years or until the tax credits are used. Sale (or broken lease) within 10 years requires that a prorated portion of the tax credit be returned. Tax credits may be taken by multiple property owners or tenants; however, the total available credit of $50,000 is per property, not per taxpayer.
The State Income Tax Credit can be used with the Federal Investment Tax Credit. If federal tax credits have been approved, no additional applications or approval is necessary. Sample Project Rehabilitation costs = $50,000 Available credit = 20% x $50,000 = $10,000 Example #1: A taxpayer owes $1,000 in state income taxes each year, so he pays $200 income tax for ten years until the full credit is taken or pays no income tax for eight years and $800 of income tax for the ninth year of the eligibility cycle. Option #1 = $1,200 annual taxes- $1,000 tax credit reduction = $200 owed in state taxes for ten years. Utilizes all available tax credits. Option #2 = Annual Taxes $1,200 - $1,200 tax credit reduction = no state taxes for eight years and owes $800 in state taxes for the ninth year. Utilizes all available tax credits.
Contact the Landmark Preservation Commission, 201 W. Colfax, Dept. 205, Denver, CO 80202 (720) 865-2985, to obtain an application, submit an application, or get additional information about the application and approval process. Contact your tax consultant to determine the extent of the benefit for you.
7/1/05