The Historic Preservation Tax Credit program provides State tax credits to developers who sensitively rehabilitate historic buildings to offer them new life. Iowa offers this tax credit program to ensure character-defining features and spaces of buildings are retained to help create distinct and vibrant communities.
Approved projects may receive a state income tax credit of up to 25% of the project’s qualified rehabilitation expenses (QREs). QREs are defined as expenses allowed under Section 47 of the federal Internal Revenue Code ( 26 U.S. Code § 47 - Rehabilitation credit | U.S. Code | US Law | LII / Legal Information Institute (cornell.edu) Generally, QREs include project expenditures related to structural components of the building and some soft costs charged to a capital account.
Tax credits may be carried forward for 5 years, or until depleted. Tax credits are transferable and refundable.
For FY 2023, the Historic Preservation Tax Credit program has $45 million allocation.
Eligibility
The process for applying for Historic Preservation Tax Credits is a 3-part application process. Applicants MUST have approved Part 1 AND Part 2 applications approved by the State Historic Preservation Office prior to applying for tax credits through Iowagrants.gov. More information on the 3-part process can be found here: Historic Preservation Tax Credit | Iowa Economic Development Authority (iowaeda.com) (Under “How Do I Apply?)
Only an eligible taxpayer may apply for tax credits under this program. An eligible taxpayer is defined as the fee simple owner of the property or someone having a long-term lease, which meets the requirements of the federal historic rehabilitation credit.
Project buildings must be historically significant for the project to qualify for tax credits. Buildings must meet at least one of the following criteria:
Building is listed on the National Register of Historic Places or determined by the staff at the State Historic Preservation Office (SHPO) to be eligible for listing Building is contributing to the significance of a historic district that is listed on or eligible to be listed on the National Register of Historic Places Building is designated as a local landmark by city or county ordinance Barn constructed before 1937 OR a barn that is listed on or eligible for listing on the National Register of Historic Places
Projects must include substantial rehabilitation. Substantial rehabilitation is defined as follows:
Commercial buildings: QREs must equal at least 50% value of the building (excluding land) before rehabilitation or $50,000, whichever is less Non-commercial buildings: QREs must equal at least 25% of the assessed value of the building (excluding land) before rehabilitation or $25,000, whichever is less
Rehabilitation work must meet federal Secretary of the Interior’s Standards for Rehabilitation.
Ineligible Costs QREs do not include project expenditures financed by federal, state or local grants or forgivable loans, unless allowed under Section 47 of the Internal Revenue Code.
(1) Any funding the applicant received from a government; or
(2) Funding from a third party or a series of third parties where those funds originally came from a government or were derived from a government payment, grant, loan, tax credit, rebate, or other government incentive; or
(3) Funding from a third party or a series of third parties where those funds are derived from, secured by, or otherwise received in anticipation of a government payment, grant, loan, tax credit, rebate, or other government incentive.
In some instances, government funding may be eligible to be included in QREs, depending on how the government funding is treated for tax purposes (i.e. If the funding is treated as taxable income). Applicants should consult with their tax advisor regarding questions on the eligibility of funds.
As part of the application, applicants must submit a memo for all public funding sources/government funding deemed eligible. Memos should include an itemized list of eligible public financing sources and reasoning of eligibility for each. Failure to produce supporting documentation will disallow sources/costs paid and reduce the amount of credits available to the project.
Public Records Policies
The Iowa Economic Development Authority (IEDA) is subject to the Open Records law (Iowa Code Chapter 22). Treatment of information submitted to IEDA through an application for assistance is governed by the provisions of the Open Records law .
Completing Your Application
Applications are reviewed and scored on a competitive basis. The evaluation and scoring criteria used can be found here: Historic Preservation Tax Credit | Iowa Economic Development Authority (iowaeda.com) (Under “Resources) Prior to applying, applicants should review Iowa Code 404a and Iowa Administrative Code 261 – Chapter 49 for additional information on program requirements: 03-23-2022.261.49.pdf (iowa.gov) Applications are submitted through www.Iowagrants.gov . Applicants must first create an Iowagrant.gov account prior to creating/submitting an application. Once an application is submitted for review, applicants will not be able to amend or correct information in the application. It is imperative that applicants review all information and ensure all required attachments are included with an application before the application is submitted for review. IEDA may ask for clarification on submitted information during the application review. Applications must be complete. Applications that are missing required information and attachments will not be reviewed or scored. IEDA staff will inform applicants why an application was not scored. Please visit the Historic Preservation Tax Credit website for additional resources regarding the application process: Historic Preservation Tax Credit | Iowa Economic Development Authority (iowaeda.com)
Agreement and Fees
Developers receiving an award will enter into an agreement with IEDA for the successful completion of all program requirements. Iowa Administrative Code 261 – Chapter 49 for a description of fees associated with the Historic Preservation Tax Credit program. 03-23-2022.261.49.pdf (iowa.gov)
