Discussion:Certified Historic Structure Fed Rehab Credit

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Advanced Tax Questions --> Certified Historic Structure Fed Rehab Credit

Discussion Forum Index --> Tax Questions --> Certified Historic Structure Fed Rehab Credit

Frontenac (talk|edits) said:

5 March 2010
Have a client that purchased a certified historic condo and rehabbed it for her principal residence in 2005. She has taken tax credit available from NC for certified historic rehab for non business prop. She has now moved and in Jan 2010 began renting her condo. For the Federal credit for historic structure, what does placed in service mean. Will she get the federal credit in 2010 which is when depreciation begins? I can't find a clear answer on this. Thanks for the help.

KatieBrewer (talk|edits) said:

5 March 2010
This is an interesting question that I think can get you hung up in the wrong section of the code. You are correct that the QREs are taken into account for the taxable year in which the qualified rehab building is placed in service (47(b)). However, in order for the buildng to be a qualified rehab. building (under 47(C)), it must be "substantially rehabilitated" which is defined in 47(c)(1)(C). You basically have a 24 month period for your QREs to qualify, and they must end in your 2010 year. Since you state that she rehabbed the condo in 2005, it wouldn't qualify here. There is a phased rehab period that can be used (60 months) mentioned in Sec. 47(c)(1)(C)(ii) which may get you there, but only if the condo rehab could reasonably be expected to be completed in phases, set out by plans back before the work began in 2005, ending in 2010. Bottom line: Unless you can argue the 60 month phased rehabilitation, I think you are out of luck for 2010. As far as your particular question on placed in service dates: Sec 47 focuses on "taken into account" for qualifying for the credit, and an election under 47(d) allows you to indirectly by pass the placed in service requirement. Sec 42 focuses on placed in service, and has some parallel info that may give you more insight into the "placed in service" issue related to qualifying expenditures. Hope this helps.

Frontenac (talk|edits) said:

6 March 2010
Thanks so much for your help. I had it all swimming in my head and you laid it out perfectly. Have a great season!

To join in on this discussion, you must first log in.
Personal tools