Enhanced New York State Historic Tax Credits for Small Projects

By: Timothy Lynn

As part of the 2021-22 Budget, New York State has adopted an enhanced historic tax credit for small projects equal to 150 percent of the project’s federal rehabilitation tax credit.

For certified historic rehabilitation projects receiving the federal rehabilitation tax credit and are located in qualifying census tracts, New York State offers a refundable tax credit equal to the federal rehabilitation tax credit, up to a cap of $5 million.  The federal credit is equal to 20 percent of qualified rehabilitation expenditures (which includes most hard costs and soft costs associated with the rehabilitation of the historic building).

Small Projects:

Under the new law, for projects placed in service between January 1, 2022 and before January 1, 2025, “small projects” will receive a credit equal to 150 percent of the project’s federal credit.  Small projects are defined as projects with less than $2.5 million in qualified rehabilitation expenditures.

Example:

For example, for a rehabilitation project of a 15,000 SF historic building for which the qualified rehabilitation expenditures will be $2,000,000, under the new law, the project (qualifying for $400,000 in federal tax credits – 20% of $2,000,000) would receive $600,000 in refundable New York State tax credits (instead of $400,000 under prior law).