Federal Historic Tax Credit

The Federal Historic Tax Credit (HTC) program was enacted in 1976 to encourage the preservation and rehabilitation of historically significant buildings. Investments in the HTC program help to restore our nation’s architectural heritage and bring new residential and commercial activity into these communities.

HTC Overview

Administered by the National Park Service and the Internal Revenue Services in partnership with State Historic Preservation Offices, the HTC program is the nation’s most effective program to promote historic preservation and community revitalization through historic rehabilitation. HTCs provide funding for developers that rehabilitate certified historic landmarks and buildings into income-generating properties that create jobs and promote economic revitalization. These properties are typically used for:


  • Commercial offices and retail properties

  • Mixed-use (commercial/residential) properties

  • Factories and industrial facilities

  • Agricultural facilities

  • Community centers

  • Educational facilities

  • Entertainment/cultural facilities 

  • Hotels and hospitality properties


Tax Benefits

Current federal tax incentives for historic preservation include:


A 20 percent tax creditof Qualified Rehabilitation Expenditures (QREs)for the cost incurred during the rehabilitation of a certified historic structure for commercial, agricultural, industrial or residential rental purposes.


The Tax Cuts and Jobs Act, signed December 22, 2017, changed the HTC for amounts that taxpayers pay or incur for QREs after December 31, 2017.   Taxpayers are now required to take the 20-percent credit ratably over five years instead of in the year they placed the building into service.


A transition rule provides relief to owners of either a certified historic structure or a pre-1936 building by allowing owners to use the prior law if the project meets these conditions:

  • The taxpayer owns or leases the building on January 1, 2018 and at all times thereafter

  • The 24- or 60-month period selected for the substantial rehabilitation test begins by June 19, 2018


In addition, many states provide state tax incentives for historic preservation.


HTC Qualification Criteria


The development property must be a certified historic structure, which can include:

  • A certified historic building listed in the National Register of Historic Places, which is the official list of the nation's districts, sites, buildings, structures and objects significant in American history, architecture, archeology, engineering and culture

  • A building located in a registered historic district and certified by the National Park Service as contributing to the historic significance of that district

  • In all cases, the building must be depreciable as a residential or commercial taxable income producing property, and rehabilitation must be substantial. 


Other requirements include:


  • During a 24-month period selected by the project sponsor (or a 60-month period, if the development is "phased") rehabilitation expenditures must exceed the greater of $5,000 or the owner's adjusted basis of the building and its structural improvements. The adjusted basis is generally the purchase price minus the cost of land, plus improvements already made, minus depreciation already taken.

  • While the building may be used for rental housing, it may not serve exclusively as the owner's private residence.


HTC Projects


In 2017, there was $5,823,202,692 worth of "qualified rehabilitation expenditures" for 1,035 individual historic preservation projects. This included 12,102 new and 7,096 rehabbed housing units. New York; Ohio; Massachusetts; Illinois and Louisiana, the top five states for tax credit activity, accounted for over $2.5 billion of the total $5.8 billion.