Rehabilitation Tax Credit - IRC Section 47

The Rehabilitation Tax Credit was made a part of the Federal Tax System starting with the Tax Reform Act of 1976. This first legislative incentive program to encourage the preservation of "historical buildings" provided a five year quick write-off. In light of the success of this program Congress then instituted a three tier Tax Credit incentive which was reduced to the current two tier credit under the 1986 Tax Reform Act. a 20% credit is available for the rehabilitation of historical buildings and a 10% credit is available for non-historic buildings, which were first placed in service before 1936.

According to the National Park Service, which administers the program. "The use of Federal tax incentives to encourage private investment in historic rehabilitation has been one of the most effective programs to promote both urban and rural revitalization."

The advantage to the Historic Rehabilitation Tax Credit for use by corporations is it's one time impact. The credit is available to the "owner" at the time the building is "placed in service." This allows a corporation to offset extraordinary increases in income or to manage the effective tax rate with a one time credit.