Historic Tax Credits
There are two historic tax credit programs that are typically utilized in Iowa for the rehabilitation of historic buildings, the Federal Historic Tax Credit (HTC) program and the Iowa Historic Preservation Tax Credit program. These programs have played a pivotal role in preserving Iowa’s rich architectural heritage while driving economic revitalization, particularly in downtown areas and historic neighborhoods. Beyond preserving the historic character of Iowa’s cities and towns, they foster local economic growth by generating jobs in the construction, architectural, and restoration industries. By offering financial incentives for the restoration and adaptive reuse of historic buildings, they help safeguard the state’s cultural identity while also contributing to the vitality of local communities.
The Federal Historic Tax Credit (HTC) offers a 20% federal income tax credit for the rehabilitation of income-producing historic properties, such as commercial buildings, rental properties, and mixed-use developments. This federal program is designed to incentivize property owners and developers to invest in preserving and rehabilitating historic buildings.
The Iowa Historic Preservation Tax Credit offers a 25% state income tax credit for qualified rehabilitation expenditures, serves as a valuable complement to the federal program. It provides additional financial incentives for developers working in Iowa, making it an even more attractive option for revitalizing historic buildings. The Iowa tax credit can be utilized for a broader range of historic buildings, including those that are not income-producing. Additionally, because it is a refundable income tax credit, it is accessible to a wider pool of applicants, including individuals and entities that may not have a large tax liability in a given year.
The Iowa Historic Preservation Tax Credit can be paired with the Federal Historic Tax Credit for income-producing properties, allowing property owners and developers to combine the 20% federal credit with the 25% state credit for a total of 45% in tax credits. This powerful combination significantly reduces the financial burden of restoring historic properties, making preservation more feasible and appealing to property owners and developers.
In some cases, these historic tax credits are also combined with other types of tax incentives available in Iowa, further enhancing the financial viability of preservation projects. By leveraging multiple tax credits, property owners developers can maximize the benefits and bring more historic properties back to life, contributing to the revitalization of communities, the creation of jobs, and the sustainable growth of local economies.
