The North Carolina historic tax credit, like many state tax credit programs, continues to face uncertain prospects of renewal. The state’s program, which since 1998 has provided a 20% tax credit paid over several years for qualifying costs incurred in rehabilitating non-residental historic buildings that qualify for the federal historic tax credit, is slated to expire at the end of 2014 unless action is taken to extend or modify the subsidy.
The current proposal included in the governor’s draft budget does maintain the historic tax credit program in NC, but changes how the credit is calculated. Under the governer’s new proposal, most projects in North Carolina would qualify for only a reduced 10% or 15% credit, depending upon the size of the project.
Since 1976, state and federal historic preservation subsidies have generated more than $1 billion in private investment in historic properties located in NC. In 2013, 237 taxpayers claimed $6.3 million in NC state tax credits for income-producing properties. Another 550 taxpayers claimed nearly $5.6 million in NC tax credits for non-income producing properties. The governer’s proposal would certainly mean fewer benefits to incentivize historic rehabilitation in NC relative to other locales.
It remains to be be seen in the coming short session whether lawmakers will extend the current preservation incentive program, approve the reduced-benefit proposed by the governor or perhaps adopt some variation (e.g., a lower percentage credit able to be claimed over a shorter period). However, most preservatists in NC believe the credit will not survive in its current form.