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Home arrowNews arrowJanuary 6, 2014

IRS Issues Guidance on Historic Rehabilitation Tax Credit

On December 30, 2013, the Internal Revenue Service (IRS) issued Revenue Procedure 2014-12, much-needed guidance on partnerships and the historic rehabilitation tax credit. The ACHP had urged the IRS to take this action in order to address recent uncertainty within the development community regarding the role of partnerships in the financing of historic rehabilitation tax credit projects. The historic tax credit is vitally important to community revitalization, helping not only to preserve historic properties but also to create jobs, enhance property values, remove blighted conditions, and promote sustainable reuse of resources.

A 2012 court decision concerning the financing structure of the partnership seeking a tax credit for the rehabilitation of Boardwalk Hall, one of the last historic properties on the boardwalk in Atlantic City, New Jersey, sparked uncertainty among potential tax credit project investors. While the Boardwalk Hall case moved forward in the courts, the Historic Tax Credit Coalition, a group of historic tax credit industry representatives, met with the IRS to discuss issues that led to the case. Prior to that meeting, the ACHP wrote to encourage the IRS to embrace the opportunity to work with interested parties to mitigate concern within the development community.

This new IRS guidance establishes the requirements (the Safe Harbor) under which the IRS will not challenge partnership allocations of historic rehabilitation tax credits by a partnership to its partners. The intent is to provide partnerships and partners with more predictability regarding the tax credit allocation. For additional information, see Preservation Action’s update.

 

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