25% State Rehabilitation Tax Credit
The Mississippi Historic Preservation Tax Incentives Program offers a 25% tax credit for the rehabilitation of historic structures used for residential or business purposes. Owner-occupied dwellings and properties used for income-producing purposes are eligible. Expenditures must have been incurred after January 1, 2006, to qualify.
Properties qualifying for the 20% federal preservation tax credit automatically qualify for the state tax credit. The combined federal and state credits can reduce the cost of a certified rehabilitation of an income-producing historic structure by 45%.
To be eligible a building must listed individually in the National Register of Historic Places, be certified as a contributing property in a National Register-listed historic district, or be designated a Mississippi Landmark. Not-for-profit entities are ineligible.
A project’s rehabilitation expenditures must exceed $5,000 or 50% of the total basis of the building. The basis is the purchase price, less the cost of land, plus improvements already made, minus depreciation already taken.
Allowable expenditures include costs associated with the work undertaken on a structural component of a historic building—such as walls, roofs, windows, floors—as well as central air conditioning and heating systems, plumbing and plumbing fixtures, electrical wiring and lighting fixtures, elevators, and other components related to the operation or maintenance of the building. Architectural and engineering fees, site survey fees, development fees, and other construction-related costs are also allowable.
Costs such as acquiring or furnishing the building, new additions, new building construction, or parking lots, sidewalks, landscaping, or other facilities related to the building are not eligible.
All work must meet the Secretary of the Interior's Standards for Rehabilitation.
To qualify for the state tax credit, property owners must submit a three-part State Historic Preservation Certification Application, along with photographs, to MDAH for review. For properties that have qualified for the federal credits, the property owner need only submit the federal certification application, along with the one-page form, Statement of Intent: Mississippi State Historic Preservation Tax Credit.
The three-part application is used to (1) request certification that the property is eligible to receive the credit; (2) request a determination that the proposed rehabilitation is in compliance with the Secretary of the Interior's Standards for Rehabilitation; and (3) request certification that the project, as completed, meets the Standards. MDAH recommends that owners submit the application for review and approval before starting work to ensure compliance with the Standards.
Photographs must accompany the application and clearly document interior and exterior conditions before and after the rehabilitation. Include views of each exterior elevation and all major interior spaces, typical minor spaces, and significant details such as porches, mantelpieces, staircases, etc. A set of photographs of the completed project must be included with the request for final certification. Photographs must be color prints at least 4"x6" (35 mm recommended). Polaroids and photocopies do not provide images of suitable quality. Do not email digital photos or send images burned to a CD.
Claiming the Credit
MDAH will issue a certificate verifying the eligible credit, and this certificate shall be attached to all income tax returns on which the credit is claimed. If the amount of the tax credit exceeds the total state income tax liability for the year in which the rehabilitated property is placed in service, the unused tax credit may be carried forward for the ten succeeding tax years.
For more information contact Todd Sanders by email or call 601-576-6950.
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