20% of qualified rehabilitation expenditures on a certified historic structure — the anchor credit of our practice, and the base that every state program layers onto.
| Quick Facts | |
|---|---|
| Credit amount | 20% of qualified rehabilitation expenditures (QREs) |
| How claimed | Ratably over five years, beginning when the building is placed in service |
| Eligibility | Certified historic structure — National Register, individually or contributing to a district; substantial rehabilitation test (QREs exceed adjusted basis); income-producing use |
| Process | Part 1 (significance) → Part 2 (proposed work) → Part 3 (completed work), reviewed by SHPO and the National Park Service |
| Status | Permanent — unchanged by the 2025 tax law |
| Stacks with | SC textile mill and abandoned buildings credits; NC, SC and VA state historic credits; LIHTC; NMTC |
This is the anchor credit of our practice — the program behind every Carolina textile mill we have financed. The federal 20% rarely works alone: layered with South Carolina’s, North Carolina’s or Virginia’s state credits, qualifying projects can recover 40% to 60% of rehabilitation costs.
Family offices should note the passive-income planning angle — see our article on offsetting passive income with the HTC.
The schedule risk is the certification, not the construction. Parts 1 and 2 typically run several months through SHPO and NPS review and should be filed before construction starts; work done before Part 2 approval is at risk.
We shepherd the Parts 1 through 3 process, prepare the projections, structure the federal and state stack, and bring the investor — then hand off to our partner CPA firm for cost certification. Moxie Investment Funds invests directly in HTC projects, including dozens of Carolina mills.
Assess my historic buildingOfficial references: IRC §47; National Park Service Technical Preservation Services; your state SHPO.
A credit equal to 20% of qualified rehabilitation expenditures for the certified rehabilitation of a certified historic structure, claimed ratably over five years beginning when the building is placed in service.
Qualified rehabilitation expenditures must exceed the adjusted basis of the building, generally measured over a 24-month period (or 60 months for a phased project under an architectural plan).
Parts 1 and 2 typically run several months through State Historic Preservation Office and National Park Service review, and should be filed before construction begins. Work completed before Part 2 approval is at risk of not qualifying.
It must be a certified historic structure, which means listed individually on the National Register or certified as contributing to a registered historic district. A nomination can run in parallel with project planning.
In our markets: the South Carolina historic, textile mill and abandoned buildings credits; the North Carolina Article 3L historic credit or the Article 3H mill credit (one or the other); and the Virginia historic rehabilitation credit.
From Carolina textile mills to landmark downtown buildings. Send us the property and we will tell you what it is worth.
