Rehabilitation Tax Credit

AAA

DEFINITION of 'Rehabilitation Tax Credit '

A federal tax incentive to encourage real estate developers to renovate, restore and reconstruct old buildings. Buildings placed in service before 1936 are eligible for a 10\% credit, and certified historic structures are eligible for a 20\% credit. The credit applies to the building's rehabilitation costs, but not to the cost of purchasing the building or to repairing sidewalks, parking lots and landscaping. The credit amount increases slightly if the building is also located in a specific disaster area.

VIDEO

Loading the player...

BREAKING DOWN 'Rehabilitation Tax Credit '

The taxpayer must also meet requirements regarding the rehabilitation project timeframe and completion date to claim the credit. Enlargement and reconstruction projects are not eligible for the tax credit, and tax-exempt properties also do not qualify. Only the title holder of the property can claim the credit. Some states also offer rehabilitation tax credits to encourage redevelopment.



RELATED TERMS
  1. Historic Structure

    A building or other structure (such as a bridge, mine, canal, ...
  2. Energy Tax Credit

    An energy tax credit is given to homeowners who make their homes ...
  3. Unified Tax Credit

    A tax credit that is afforded to every man, woman and child in ...
  4. Refundable Credit

    A tax credit that is not limited by the amount of an individual's ...
  5. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  6. Non-Refundable Tax Credit

    A tax credit that can't reduce the amount of tax owed to less ...
Related Articles
  1. Entrepreneurship

    Tax Credit For Plan Expenses Incurred By Small Businesses

    Determine whether your business is eligible to claim a tax credit for establishing a retirement plan.
  2. Savings

    Saver's Tax Credit: A Retirement Savings Incentive

    Here's another reason to put money toward your retirement nest egg.
  3. Taxes

    Get A Tax Credit For Your Foreign Investments

    The foreign tax credit provides a break on investment income made and taxed in a foreign country.
  4. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Professionals

    Advisors: Warn Clients About These Audit Triggers

    There are several factors that may increase the risk of an audit, especially with high-net-worth clients.
  7. Entrepreneurship

    What's the Purpose of IRS Form 1065?

    Business partners need the information on this form to complete their own tax returns. Here are the details.
  8. Economics

    The Biggest Items Obama Is Still Missing From His Mandate

    Learn how the biggest items missing from Obama's mandate include various forms of tax reform and closing the Guantanamo Bay prison in Cuba.
  9. Professionals

    How Going Green Can Cut Your Taxes

    Investors looking to improve their bottom line via green investing without risk should take advantage of these tax credits.
  10. Taxes

    What is Adjusted Gross Income?

    Adjusted gross income (AGI) is a term from the Internal Revenue Code. AGI is used to determine a person’s income taxes due.
RELATED FAQS
  1. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at Bankrate.com, TaxACT.com and Moneychimp.com. Determining ... Read Full Answer >>
  2. Can I get a tax credit from conducting research and development?

    It is possible for a company to qualify for a research and development tax credit for conducting research and development. ... Read Full Answer >>
  3. What is the difference between MAGI (modified adjusted gross income) and adjusted ...

    Calculating personal income tax correctly involves understanding two important tax terms: adjusted gross income (AGI) and ... Read Full Answer >>
  4. What is the difference between a regressive tax versus a progressive tax?

    A progressive tax is one that increases along with an individual's ability to pay the tax, while a regressive tax doesn't ... Read Full Answer >>
  5. What are some ways to minimize tax liability?

    Minimizing tax liability is one of the most important financial planning aspects for business owners and individuals each ... Read Full Answer >>
  6. What deductions, credits and exemptions depend on gross income calculations?

    The greatest challenge in determining your total tax liability stems from an incomplete understanding of what income figure ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  2. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  3. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  4. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  5. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  6. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!