Definitions

Owner means any taxpayer filing a State of Connecticut tax return who possesses title to an historic home or prospective title to an historic home in the form of a purchase agreement or option to purchase, or a nonprofit corporation that possesses the title or prospective title.

Historic home means a building that:

• Will contain one to four dwelling units of which at least one unit will be occupied as the principal residence of the owner for not less than five years following the completion of rehabilitation work;
• Is located in a targeted area (this requirement however, is eliminated for income years beginning on or after January 1, 2015); and
• Is listed individually on the National or State Register of Historic Places, or located in a district listed on the National or State Register of Historic Places, and has been certified by DECD as contributing to the historic character of the district.

Qualified rehabilitation expenditures means any costs incurred for the physical construction involved in the rehabilitation of an historic home, but excludes:

• The owner’s personal labor;
• The cost of site improvements, unless to provide building access to persons with disabilities;
• The cost of a new addition, except as may be required to comply with any provision of the State Building Code or the State Fire Safety Code;
• Any cost associated with the rehabilitation of an outbuilding, unless such building contributes to the historic significance of the historic home; and
• Any nonconstruction costs such as architectural fees, legal fees, and financing fees.

• A federally designated qualified census tract in which 70% or more of the families have a median income of  80% or less of the state-wide median family income;
• A state designated and federally approved area of chronic economic distress; or
• An urban and regional center as identified in the Connecticut Conservation and Development Policies Plan.

Tax Credit Amount

The tax credit is equal to the lesser of 30% of the projected qualified rehabilitation expenditures or 30% of the actual rehabilitation expenditures. The amount of the tax credit that may be claimed will be entered on the voucher issued by DECD.

In general, the tax credit allowed shall not exceed $30,000 per dwelling unit for an historic home. However, for income years beginning on or after January 1, 2015, the maximum amount of tax credit per dwelling unit for an historic home is increased to $50,000 for owners that are nonprofit corporations.

Carryforward and Carryback Limitations

The tax credit may be carried forward for four years following the year in which the voucher was issued. No carryback is allowed.

How to Apply

Prior to beginning any rehabilitation work on an historic home, the owner must submit to DECD a rehabilitation plan and an estimate of the qualified rehabilitation expenditures. If DECD certifies that the rehabilitation plan conforms to the standards for approval of the rehabilitation, DECD will reserve an allocation for tax credit equivalent to 30% of the projected qualified rehabilitation expenditures.

Following the completion of the rehabilitation of an historic home, DECD will verify the owner’s compliance with the rehabilitation plan and issue a tax credit voucher to either the owner rehabilitating the historic home or to the taxpayer named by the owner as contributing to the rehabilitation.

For income years beginning before January 1, 2015, the owner is not eligible for a tax credit voucher unless the owner incurs qualified rehabilitation expenditures exceeding $25,000.  However, for income years beginning on or after January 1, 2015, the minimum amount of qualified rehabilitation expenditures that an owner must make to be eligible for a tax credit voucher is decreased to $15,000. The owner must verify that he or she will occupy the historic home as his or her primary residence for at least five years, or that the owner will convey the home to a new owner who will occupy the home as his or her primary residence for at least five years, or record an encumbrance in favor of the funding source that will require that owner or owner’s successors to occupy the home for five years.

Application for tax credit voucher must be made with DECD. Contact DECD at 860-256-2756 for application information.

How to Claim the Tax Credit

The amount listed on the tax credit voucher must be entered on Form CT-1120HH, Historic Homes Rehabilitation Tax Credit, and Form CT-1120HH must be attached to Form CT-1120K, Business Tax Credit Summary, and/or Form CT-207K, Insurance/Health Care Tax Credit Schedule. The tax credit must be claimed by the holder of the tax credit voucher in the same year in which the voucher is issued.

Where to Get Additional Information

Direct inquiries to:

Connecticut Department of Economic and Community Development

State Historic Preservation Office

One Constitution Plaza Office, 2^nd Floor

Hartford CT 06103

860-256-2756

www.cultureandtourism.org

Statutory and Regulatory References

Conn. Gen. Stat. §10-416, as amended by 2013 Conn. Pub. Acts 266, §1; Conn. Agencies Regs. §§10-320j-1 through 10-320j-9

Last updated February 3, 2014