Ohio Passes State Rehab Tax Credit

After many years of lobbying by Buckeye State preservationists, the Ohio General Assembly has passed a law providing for tax credits for renovation of the state’s historic buildings. Substitute House Bill 149 was signed into law by Governor Taft on January 2, 2007.

The new law establishes a four-year pilot program providing a 25 percent credit for the redevelopment of income-producing historic buildings in the National Register of Historic Places or in nationally or locally designated historic districts. It requires the state to conduct a cost-benefit analysis of each application. It also requires applicants to show that the reconstruction eventually will produce a net gain in state and local taxes. The state credit can also be combined with an existing 20 percent federal credit for historic revitalization.

The state will accept applications for two years beginning July 1, 2007. The number of eligible projects statewide is capped at 100 per year.

Ohio now joins 28 other states with tax credits for historic renovation. In many states with similar laws the rehab activity generated has proved to be a net benefit for state coffers.

Preservation Easement Reforms Enacted

Preservations were alarmed in 2005 when Congress proposed reforms to the legislation governing preservation and conservation easements that would have limited their usefulness, and their tax benefits. Following a public outcry, Congress enacted a new law that affirmed the value of these critical preservation tools. In August 2006 President Bush signed Public Law 109-280, the first major reforms in the law relating to tax deductions for historic preservation easements in 25 years.

Many of the changes are logical reforms to address questionable practices by some easement holding organizations and promoters. Major provisions of the law would disallow deductions for façade easements that don’t protect the entire exterior of a property, and prohibit easements that allow changes incompatible with a building’s historic character. The law also imposes new filing fees, penalties for overvaluation, and new qualification standards.

Some provisions of the law are more questionable: for example, eliminating deductions for structures or open land in historic districts, and reducing easements on structures that have also qualified for the rehabilitation tax credit. Overall, however, the changes included in Public Law 109-280 should help to encourage higher standards of practice for easement holding organizations, easement promoters, and appraisers.

Finally, Public Law 109-280 includes a provision that increases the amount of the deduction limitation for individual taxpayers from 30 percent to 50 percent of the taxpayer’s contribution base in the year the donation is made, and extends the carryover period to 15 years. This change is effective, however, only for tax years 2006 and 2007. For a more detailed summary of the provisions of this new law, visit http://www.nationaltrust.org/legal/documents/ PL109-280.NTHP.Easement.Summary.pdf