H.B. 286

1

CORPORATE FRANCHISE AND INCOME TAX
2 AND INDIVIDUAL INCOME TAX CREDITS -
3 HISTORIC BUILDING REHABILITATION
4 2001 GENERAL SESSION
5 STATE OF UTAH
6 Sponsor: Chad E. Bennion
7 This act amends the Individual Income Tax Act and Corporate Franchise and Income Taxes
8 to expand the corporate franchise and income tax and individual income tax historic
9 building rehabilitation credits to include credits for commercial certified historic buildings
10 and commercial qualified historic buildings. The act deletes a requirement that a taxpayer
11 reside in the state to be eligible for a tax credit. This act provides definitions and makes
12 technical changes. The act has retrospective operation for taxable years beginning on or
13 after January 1, 2001.
14 This act affects sections of Utah Code Annotated 1953 as follows:
15 AMENDS:
16 59-7-609, as enacted by Chapter 42, Laws of Utah 1995
17 59-10-108.5, as last amended by Chapter 25, Laws of Utah 1995
18 Be it enacted by the Legislature of the state of Utah:
19 Section 1. Section 59-7-609 is amended to read:
20 59-7-609. Historic building rehabilitation credit.
21 (1) As used in this section:
22 (a) "Certified historic building" means a building or structure that:
23 (i) (A) is listed on the National Register of Historic Places; or
24 (B) is listed on the National Register of Historic Places within a three-year period after a
25 taxpayer claims a credit under this section; or
26 (ii) is located in a National Register Historic District; and
27 (iii) the Division of State History has designated as being of significance to the National

28 Register Historic District.
29 (b) "Commercial certified historic building" means a commercial unit that is a certified
30 historic building.
31 (c) "Commercial qualified historic building" means a commercial unit that is a qualified
32 historic building.
33 (d) "Commercial unit" means a building or structure that is primarily used for the purpose
34 of conducting business.
35 (e) "Qualified historic building" means a building that is determined by the Division of
36 State History to meet the age and integrity requirements established by the National Register of
37 Historic Places.
38 (f) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
39 the rehabilitation and restoration of the physical elements of a building, including:
40 (A) the historic decorative elements of the building;
41 (B) the upgrading of the structural, mechanical, electrical, or plumbing systems of the
42 building to applicable codes; or
43 (C) notwithstanding Subsection (1)(f)(ii)(E), an expenditure described in Subsection
44 (1)(f)(ii)(E)(II) or (III) if the outbuilding or secondary structure is a:
45 (I) certified historic building; or
46 (II) qualified historic building.
47 (ii) "Qualified rehabilitation expenditures" does not include:
48 (A) an expenditure related to the taxpayer's personal labor;
49 (B) an expenditure related to the cost of acquiring the property;
50 (C) an expenditure attributable to the enlargement of an existing building;
51 (D) if the rehabilitation work is not approved as provided in Subsection (2)(c), an
52 expenditure related to rehabilitation work on a:
53 (I) certified historic building; or
54 (II) qualified historic building;
55 (E) except as provided in Subsection (1)(f)(i)(C), an expenditure attributable to:
56 (I) landscaping or other site features;
57 (II) an outbuilding;
58 (III) a secondary structure; or

59 (IV) an expenditure similar to those described in Subsections (1)(f)(ii)(E)(I) through (III).
60 (g) "Residential" means a building that is:
61 (i) primarily used for residential purposes; and
62 (ii) (A) occupied by the owner of the building; or
63 (B) income producing.
64 [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed to
65 a] A taxpayer subject to [Section 59-7-104 , as a credit against the tax due,] taxation under this
66 chapter may claim the following nonrefundable credits against the taxes imposed by this chapter
67 as provided in this section:
68 (i) for taxable years beginning on or after January 1, 1993, an amount equal to 20% of the
69 total amount of the taxpayer's qualified rehabilitation expenditures[, costing more than] if the
70 taxpayer expends more than $10,000[, incurred] in connection with [any] a residential certified
71 historic building[. When qualifying expenditures of more than $10,000 are incurred, the credit
72 allowed by this section shall apply to the full amount of expenditures.];
73 (ii) except as provided in Subsection (2)(b), for taxable years beginning on or after January
74 1, 2001, an amount equal to 20% of the total amount of the taxpayer's qualified rehabilitation
75 expenditures if the taxpayer expends more than $10,000 in connection with a:
76 (A) commercial certified historic building; or
77 (B) commercial qualified historic building; or
78 (iii) a combination of the credits described in Subsections (2)(a)(i) and (ii).
79 (b) (i) Notwithstanding Subsection (2)(a)(ii), the maximum amount of credit that may be
80 claimed or carried forward during a six-year period is $100,000 for all of the qualified
81 rehabilitation expenditures incurred in connection with:
82 (A) each commercial certified historic building; or
83 (B) each commercial qualified historic building.
84 (ii) A six-year period described in Subsection (2)(b)(i):
85 (A) begins on the first day of the first taxable year for which a taxpayer may claim a credit
86 under Subsection (2)(a)(ii); and
87 (B) ends six years after the date described in Subsection (2)(b)(ii)(A).
88 [(b)] (c) All rehabilitation work to which [the] a credit under this section may be applied
89 shall be approved by the State Historic Preservation Office prior to completion of the rehabilitation

90 project as meeting the Secretary of the Interior's Standards for Rehabilitation so that the [office
91 can] State Historic Preservation Office may provide corrective comments to the taxpayer in order
92 to preserve the historical qualities of the building.
93 [(c) Any] (d) If the amount of a tax credit [remaining] a taxpayer claims under this section
94 exceeds the taxpayer's tax liability for a taxable year, the taxpayer may [be carried] carry forward
95 [to each of the] the amount of the credit that exceeds the liability for a period that does not exceed
96 five taxable years following the day on which the taxpayer incurred the qualified rehabilitation
97 expenditures.
98 [(d) The] (e) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking
99 Act, the commission, in consultation with the Division of State History, shall promulgate rules to
100 implement this section.
101 [(2) As used in this section:]
102 [(a) "Certified historic building" means a building that is listed on the National Register
103 of Historic Places within three years of taking the credit under this section or that is located in a
104 National Register Historic District and the building has been designated by the Division of State
105 History as being of significance to the district.]
106 [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
107 the rehabilitation and restoration of the physical elements of the building, including the historic
108 decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing
109 systems to applicable codes.]
110 [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
111 [(A) the taxpayer's personal labor;]
112 [(B) cost of acquisition of the property;]
113 [(C) any expenditure attributable to the enlargement of an existing building;]
114 [(D) rehabilitation of a certified historic building without the approval required in
115 Subsection (1)(b); or]
116 [(E) any expenditure attributable to landscaping and other site features, outbuildings,
117 garages, and related features.]
118 [(c) "Residential" means a building used for residential use, either owner occupied or
119 income producing.]
120 Section 2. Section 59-10-108.5 is amended to read:

121 59-10-108.5. Historic building rehabilitation credit.
122 (1) As used in this section:
123 (a) "Certified historic building" means a building or structure that:
124 (i) (A) is listed on the National Register of Historic Places; or
125 (B) is listed on the National Register of Historic Places within a three-year period after a
126 taxpayer claims a credit under this section; or
127 (ii) is located in a National Register Historic District; and
128 (iii) the Division of State History has designated as being of significance to the National
129 Register Historic District.
130 (b) "Commercial certified historic building" means a commercial unit that is a certified
131 historic building.
132 (c) "Commercial qualified historic building" means a commercial unit that is a qualified
133 historic building.
134 (d) "Commercial unit" means a building or structure that is primarily used for the purpose
135 of conducting business.
136 (e) "Qualified historic building" means a building that is determined by the Division of
137 State History to meet the age and integrity requirements established by the National Register of
138 Historic Places.
139 (f) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
140 the rehabilitation and restoration of the physical elements of a building, including:
141 (A) the historic decorative elements of the building;
142 (B) the upgrading of the structural, mechanical, electrical, or plumbing systems of the
143 building to applicable codes; or
144 (C) notwithstanding Subsection (1)(f)(ii)(E), an expenditure described in Subsection
145 (1)(f)(ii)(E)(II) or (III) if the outbuilding or secondary structure is a:
146 (I) certified historic building; or
147 (II) qualified historic building.
148 (ii) "Qualified rehabilitation expenditures" does not include:
149 (A) an expenditure related to the taxpayer's personal labor;
150 (B) an expenditure related to the cost of acquiring the property;
151 (C) an expenditure attributable to the enlargement of an existing building;

152 (D) if the rehabilitation work is not approved as provided in Subsection (2)(c), an
153 expenditure related to rehabilitation work on a:
154 (I) certified historic building; or
155 (II) qualified historic building; or
156 (E) except as provided in Subsection (1)(f)(i)(C), an expenditure attributable to:
157 (I) landscaping or other site features;
158 (II) an outbuilding;
159 (III) a secondary structure; or
160 (IV) an expenditure similar to those described in Subsections (1)(f)(ii)(E)(I) through (III).
161 (g) "Residential" means a building that is:
162 (i) primarily used for residential purposes; and
163 (ii) (A) occupied by the owner of the building; or
164 (B) income producing.
165 [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed to
166 resident individuals, as a credit against the income tax due] A taxpayer subject to taxation under
167 this chapter may claim the following nonrefundable credits against the taxes imposed by this
168 chapter as provided in this section:
169 (i) for taxable years beginning on or after January 1, 1993, an amount equal to 20% of the
170 total amount of the taxpayer's qualified rehabilitation expenditures[, costing more than] if a
171 taxpayer expends more than $10,000[, incurred] in connection with [any] a residential certified
172 historic building[. When qualifying expenditures of more than $10,000 are incurred, the credit
173 allowed by this section shall apply to the full amount of expenditures.];
174 (ii) except as provided in Subsection (2)(b), for taxable years beginning on or after January
175 1, 2001, an amount equal to 20% of the total amount of the taxpayer's qualified rehabilitation
176 expenditures if the taxpayer expends more than $10,000 in connection with a:
177 (A) commercial certified historic building; or
178 (B) commercial qualified historic building; or
179 (iii) a combination of the credits described in Subsections (2)(a)(i) and (ii).
180 (b) (i) Notwithstanding Subsection (2)(a)(ii), the maximum amount of credit that may be
181 claimed or carried forward during a six-year period is $100,000 for all of the qualified
182 rehabilitation expenditures incurred in connection with:

183 (A) each commercial certified historic building; or
184 (B) each commercial qualified historic building.
185 (ii) A six-year period described in Subsection (2)(b)(i):
186 (A) begins on the first day of the first taxable year for which a taxpayer may claim a credit
187 under Subsection (2)(a)(ii); and
188 (B) ends six years after the date described in Subsection (2)(b)(ii)(A).
189 [(b)] (c) All rehabilitation work to which [the] a credit under this section may be applied
190 shall be approved by the State Historic Preservation Office prior to completion of the
191 rehabilitation project as meeting the Secretary of the Interior's Standards for Rehabilitation so that
192 the [office can] State Historic Preservation Office may provide corrective comments to the
193 taxpayer in order to preserve the historical qualities of the building.
194 [(c) Any] (d) If the amount of a tax credit [remaining] a taxpayer claims under this section
195 exceeds the taxpayer's tax liability for a taxable year, the taxpayer may [be carried] carry forward
196 [to each of the] the amount of the credit that exceeds the liability for a period that does not exceed
197 five taxable years following the day on which the taxpayer incurred the qualified rehabilitation
198 expenditures.
199 [(d) The] (e) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking
200 Act, the commission, in consultation with the Division of State History, shall promulgate rules to
201 implement this section.
202 [(2) As used in this section:]
203 [(a) "Certified historic building" means a building that is listed on the National Register
204 of Historic Places within three years of taking the credit under this section or that is located in a
205 National Register Historic District and the building has been designated by the Division of State
206 History as being of significance to the district.]
207 [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
208 the rehabilitation and restoration of the physical elements of the building, including the historic
209 decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing
210 systems to applicable codes.]
211 [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
212 [(A) the taxpayer's personal labor;]
213 [(B) cost of acquisition of the property;]

214 [(C) any expenditure attributable to the enlargement of an existing building;]
215 [(D) rehabilitation of a certified historic building without the approval required in
216 Subsection (1)(b); or]
217 [(E) any expenditure attributable to landscaping and other site features, outbuildings,
218 garages, and related features.]
219 [(c) "Residential" means a building used for residential use, either owner occupied or
220 income producing.]
221 Section 3. Retrospective operation.
222 This act has retrospective operation for taxable years beginning on or after January 1, 2001.




Legislative Review Note
as of 2-1-01 10:20 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel