Life After Tax Reform: An HTC Update

Just before the end of 2017, tax reform was passed by the Federal Government. Included in the legislation that was signed into law was the Historic Tax Credit program, which had been under threat. The House and Senate Conference Committee reconciled the differences between their two versions of the tax bill. The final agreement eliminated the pre-1936 10% non-historic tax credit but included the 20% Historic Tax Credit (HTC) with a provision that it will be claimed over five years. Also, the Conference Committee included additional transition rule language that now clearly covers phased rehabilitations for which the taxpayer may select a 60-month period.

While advocates were disappointed they could not fully restore the 20% HTC to current law and prevent the elimination of the 10% pre-1936 rehabilitation credit, there was plenty to celebrate. Despite this being the most significant overhaul of the nation’s tax code in three decades in which hundreds of deductions and credits have been reduced or eliminated, the HTC was to be retained as an incentive to protect and restore historic buildings across the country.

Now that tax reform is over many people want to know what is next. Jim Igoe moderated a National Trust webinar about “Tax Credits in a Post Tax Reform World” earlier in January. The webinar featured input from developers, policy advocates in Washington DC and others. Nearly 600 people from all over the country were on live. The webinar will be uploaded to the National Trust for Historic Preservation’s Policy page that can be accessed here.

Next Steps...

In terms of next steps, at some point in the next few months there will a be an opportunity to make positive adjustments to the HTC in a “Technical Corrections” bills that will clean up ambiguities unanticipated consequences of changes in the tax code.

Additionally, there may be opportunity for improvement to the HTC in new legislation that could be considered next year. Within these opportunities, advocates will focus to further improve the HTC by attempting to eliminate the basis reduction (bringing parity with Low-Income Housing Tax Credits), strive for more favorable transition rules, and enact main street revitalization provisions of the Historic Tax Credit Improvement Act (H.R. 1158/S.425).

These are key issues we will be discussing with our delegation when we and other Massachusetts colleagues head to Washington the week of March 12 for National Preservation Advocacy Week.

We could not have achieved this great result without the leadership of many Members of Congress who responded to the requests of their constituents and fought for the retention of the HTC in the tax code. So if you contacted your Congressional representatives on behalf of the HTC, thank you for helping ensure this important program continues to benefit our communities for years to come.