Historic Homes Rehabilitation Tax Credit
Conn. Gen. Stat. §10-416
What’s New
Amendments to the Historic Homes Rehabilitation Tax Credit
Legislation sets forth the various taxes for which such persons holding a tax credit voucher issued on or after January 1, 2024, may apply. The legislation also makes changes to the carryforward provisions relative to said credit. The legislation is effective July 1, 2024, and applicable to taxable and income years commencing on or after January 1, 2024.
Description and Applicable Taxes
A tax credit administered by the Connecticut Department of Economic and Community Development (DECD) is available to owners rehabilitating any historic home or taxpayers making contributions to qualifying rehabilitation expenditures. To be eligible for this credit, an owner must file an application with DECD. No credit may be claimed before DECD issues a tax credit voucher.
Taxpayers holding a credit voucher issued priorto January 1, 2024, may apply the tax credit against any taxes imposed under:
- Chapter 207 (Insurance Companies and Health Care Centers Taxes);
- Chapter 208 (Corporation Business Tax);
- Chapter 209 (Air Carriers Tax);
- Chapter 210 (Railroad Companies Tax);
- Chapter 211 (Community Antenna Television Systems and One-Way Satellite Transmission Business Tax); and
- Chapter 212 (Utility Companies Tax).
Credit vouchers issued on or after January 1, 2024, may also be applied against any taxes imposed under:
- Chapter 208a (Unrelated Business Income Tax); and
- Chapter 229 (Income Tax).
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; 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 non-construction costs such as architectural fees, legal fees, and financing fees.
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, 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
If a taxpayer holding a tax credit voucher claims a credit against any tax imposed under chapter 207, 208, 208a, 209, 210, 211 or 212, any unused portion of this credit may be carried forward to any or all of the four income years following the year in which the tax credit voucher is issued. No carryback is allowed.
If a taxpayer holding a tax credit voucher claims a credit against the tax imposed under chapter 229, the amount of the credit voucher that exceeds the taxpayer’s liability for such tax, the excess shall be considered an overpayment and shall be refunded without interest.
How to Apply
Applications for this tax credit must be made with DECD, prior to beginning any rehabilitation work. As part of the application, 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.
The owner is not eligible for a tax credit voucher unless the owner incurs qualified rehabilitation expenditures exceeding $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.
Assignment and Transfer
Insurance Companies and Health Care Centers: This credit may be assigned by an insurance company or health care center to an affiliate, provided the affiliate may only apply the assigned credit against its tax liability under Chapter 207 (Insurance Companies and Health Care Centers Taxes).
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 must be attached to Form CT‑1120K, Business Tax Credit Summary, Form CT‑207K, Insurance/Health Care Tax Credit Schedule, Form CT-1040, Connecticut Resident Income Tax Return, and/or Form CT-1040NR/PY, Connecticut Nonresident and Part-Year Resident Income Tax Return. 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
450 Columbus Boulevard
Hartford CT 06103
860-500-2426
Statutory and Regulatory References
Conn. Gen. Stat. §10-416 as amended by 2024 Conn. Pub. Acts 109;
Conn. Agencies Regs. §§10-320j-1 through 10-320j-9
Page Last Reviewed or Updated: September 10, 2024