H.B. 193

1

HISTORIC BUILDING REHABILITATION
2 TAX CREDITS
3 2003 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Chad E. Bennion
6 This act amends the Individual Income Tax Act and Corporate Franchise and Income
7 Taxes to modify the corporate franchise and income tax and individual income tax
8 historic building rehabilitation tax credits. The act provides tax credits for commercial
9 certified historic buildings and commercial qualified historic buildings. The act deletes a
10 requirement that a taxpayer reside in the state to be eligible for a tax credit. This act
11 provides definitions and makes technical changes. The act has retrospective operation
12 for taxable years beginning on or after January 1, 2003.
13 This act affects sections of Utah Code Annotated 1953 as follows:
14 AMENDS:
15 59-7-609, as enacted by Chapter 42, Laws of Utah 1995
16 59-10-108.5, as last amended by Chapter 25, Laws of Utah 1995
17 Be it enacted by the Legislature of the state of Utah:
18 Section 1. Section 59-7-609 is amended to read:
19 59-7-609. Historic building rehabilitation tax credit.
20 (1) As used in this section:
21 (a) "Certified historic building" means a building or structure that:
22 (i) (A) is listed on the National Register of Historic Places; or
23 (B) is listed on the National Register of Historic Places within a three-year period after
24 a taxpayer claims a credit under this section;
25 (ii) is located in:
26 (A) this state; and
27 (B) a National Register Historic District; and

28 (iii) the division has designated as being of significance to the National Register
29 Historic District.
30 (b) "Commercial certified historic building" means a commercial unit that is a certified
31 historic building.
32 (c) "Commercial qualified historic building" means a commercial unit that is a
33 qualified historic building.
34 (d) (i) "Commercial unit" means a building or structure that is primarily used for the
35 purpose of conducting business.
36 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
37 the division may make rules defining the term "conducting business."
38 (e) "Division" means the Division of State History.
39 (f) "Qualified historic building" means, as determined by the division, a building:
40 (i) that meets the:
41 (A) age requirements established by the National Register of Historic Places; and
42 (B) integrity requirements established by the National Register of Historic Places; and
43 (ii) for which any qualifying rehabilitation expenditures made by a taxpayer claiming a
44 tax credit under this section meet the Secretary of the Interior's Standards for Rehabilitation.
45 (g) (i) "Qualified rehabilitation expenditures" means, as determined by the division, an
46 expenditure incurred for the rehabilitation of the physical elements of a:
47 (A) commercial certified historic building;
48 (B) commercial qualified historic building; or
49 (C) residential certified historic building.
50 (ii) "Qualified rehabilitation expenditures" does not include:
51 (A) an expenditure related to a taxpayer's personal labor;
52 (B) an expenditure related to the cost of acquiring the real property upon which a
53 building is located;
54 (C) an expenditure attributable to the enlargement of a building;
55 (D) any expenditure related to rehabilitation work if the rehabilitation work is not
56 approved as provided in Subsection (4);
57 (E) an expenditure attributable to landscaping or other site features; or
58 (F) an expenditure similar to an expenditure described in Subsections (1)(g)(ii)(A)

59 through (E).
60 (h) (i) "Rehabilitation project" means a project:
61 (A) to rehabilitate a:
62 (I) commercial certified historic building;
63 (II) commercial qualified historic building; or
64 (III) residential certified historic building; and
65 (B) for which a taxpayer claiming a tax credit under this section incurs qualified
66 rehabilitation expenditures.
67 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
68 the division may by rule define the term "project."
69 (i) "Residential certified historic building" means a certified historic building that, as
70 determined by the division, is:
71 (i) primarily used for residential purposes; and
72 (ii) (A) occupied by the owner of the building; or
73 (B) income producing.
74 (j) "Tax credit threshold" means that a taxpayer has made qualified rehabilitation
75 expenditures that total at least $10,000 with respect to each:
76 (i) commercial certified historic building for which the taxpayer claims a tax credit
77 under this section;
78 (ii) commercial qualified historic building for which the taxpayer claims a tax credit
79 under this section; or
80 (iii) residential certified historic building for which the taxpayer claims a tax credit
81 under this section.
82 [(1) (a) For tax years beginning January 1, 1993, and thereafter, there is allowed to a]
83 (2) A taxpayer subject to [Section 59-7-104 , as a credit against the tax due, an amount]
84 taxation under this chapter may claim the following nonrefundable tax credits against the taxes
85 imposed by this chapter as provided in this section:
86 (a) for taxable years beginning on or after January 1, 1993, a taxpayer meeting the tax
87 credit threshold for a residential certified historic building may claim a tax credit equal to 20%
88 of the total amount of the taxpayer's qualified rehabilitation expenditures[, costing more than
89 $10,000, incurred in connection with any] for the residential certified historic building[. When

90 qualifying expenditures of more than $10,000 are incurred, the credit allowed by this section
91 shall apply to the full amount of expenditures.];
92 [(b) All] (b) except as provided in Subsection (3), for taxable years beginning on or
93 after January 1, 2003, a taxpayer meeting the tax credit threshold for a:
94 (i) commercial certified historic building may claim a tax credit equal to 20% of the
95 total amount of the taxpayer's qualified rehabilitation expenditures for the commercial certified
96 historic building; or
97 (ii) commercial qualified historic building may claim a tax credit equal to 20% of the
98 total amount of the taxpayer's qualified rehabilitation expenditures for the commercial qualified
99 historic building; or
100 (c) a combination of the tax credits described in Subsections (2)(a) and (b).
101 (3) (a) Notwithstanding Subsection (2)(b), the maximum amount of tax credit that a
102 taxpayer may claim or carry forward during a six-year period is $100,000 for all of the
103 qualified rehabilitation expenditures incurred in connection with each:
104 (i) commercial certified historic building; or
105 (ii) commercial qualified historic building.
106 (b) The six-year period described in Subsection (3)(a) begins on the first day of the first
107 taxable year for which a taxpayer may claim a tax credit under Subsection (2)(b).
108 (4) A taxpayer seeking to claim a tax credit under this section shall:
109 (a) file an application for approval of the taxpayer's qualified rehabilitation
110 expenditures:
111 (i) prior to the completion of the rehabilitation project; and
112 (ii) on a form supplied by the division;
113 (b) obtain:
114 (i) approval for the taxpayer's qualified rehabilitation [work to which the credit may be
115 applied shall be approved by the State Historic Preservation Office] expenditures:
116 (A) from the division; and
117 (B) prior to completion of the rehabilitation project [as meeting the Secretary of the
118 Interior's Standards for Rehabilitation so that the office can provide corrective comments to the
119 taxpayer in order to preserve]; and
120 (ii) after completing the rehabilitation project, an authorization form to claim the tax

121 credit:
122 (A) from the division; and
123 (B) on a form provided by the commission; and
124 (c) comply with any requirement of the division to ensure that the historical qualities of
125 the building are preserved.
126 [(c) Any] (5) Subject to Subsection (3), if the amount of a tax credit [remaining] a
127 taxpayer claims under this section exceeds that taxpayer's tax liability for a taxable year, the
128 taxpayer may [be carried] carry forward [to each of] the amount of the tax credit that exceeds
129 the taxpayer's tax liability for a time period that does not exceed the next five taxable years
130 [following the qualified expenditures].
131 [(d) The commission,] (6) In accordance with Title 63, Chapter 46a, Utah
132 Administrative Rulemaking Act, and in consultation with the [division of State History]
133 division, the commission shall promulgate rules to implement this section.
134 [(2) As used in this section:]
135 [(a) "Certified historic building" means a building that is listed on the National
136 Register of Historic Places within three years of taking the credit under this section or that is
137 located in a National Register Historic District and the building has been designated by the
138 Division of State History as being of significance to the district.]
139 [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable
140 to the rehabilitation and restoration of the physical elements of the building, including the
141 historic decorative elements, and the upgrading of the structural, mechanical, electrical, and
142 plumbing systems to applicable codes.]
143 [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
144 [(A) the taxpayer's personal labor;]
145 [(B) cost of acquisition of the property;]
146 [(C) any expenditure attributable to the enlargement of an existing building;]
147 [(D) rehabilitation of a certified historic building without the approval required in
148 Subsection (1)(b); or]
149 [(E) any expenditure attributable to landscaping and other site features, outbuildings,
150 garages, and related features.]
151 [(c) "Residential" means a building used for residential use, either owner occupied or

152 income producing].
153 Section 2. Section 59-10-108.5 is amended to read:
154 59-10-108.5. Historic building rehabilitation tax credit.
155 (1) As used in this section:
156 (a) "Certified historic building" means a building or structure that:
157 (i) (A) is listed on the National Register of Historic Places; or
158 (B) is listed on the National Register of Historic Places within a three-year period after
159 a taxpayer claims a credit under this section;
160 (ii) is located in:
161 (A) this state; and
162 (B) a National Register Historic District; and
163 (iii) the division has designated as being of significance to the National Register
164 Historic District.
165 (b) "Commercial certified historic building" means a commercial unit that is a certified
166 historic building.
167 (c) "Commercial qualified historic building" means a commercial unit that is a
168 qualified historic building.
169 (d) (i) "Commercial unit" means a building or structure that is primarily used for the
170 purpose of conducting business.
171 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
172 the division may make rules defining the term "conducting business."
173 (e) "Division" means the Division of State History.
174 (f) "Qualified historic building" means, as determined by the division, a building:
175 (i) that meets the:
176 (A) age requirements established by the National Register of Historic Places; and
177 (B) integrity requirements established by the National Register of Historic Places; and
178 (ii) for which any qualifying rehabilitation expenditures made by a taxpayer claiming a
179 tax credit under this section meet the Secretary of the Interior's Standards for Rehabilitation.
180 (g) (i) "Qualified rehabilitation expenditures" means, as determined by the division, an
181 expenditure incurred for the rehabilitation of the physical elements of a:
182 (A) commercial certified historic building;

183 (B) commercial qualified historic building; or
184 (C) residential certified historic building.
185 (ii) "Qualified rehabilitation expenditures" does not include:
186 (A) an expenditure related to a taxpayer's personal labor;
187 (B) an expenditure related to the cost of acquiring the real property upon which a
188 building is located;
189 (C) an expenditure attributable to the enlargement of a building;
190 (D) any expenditure related to rehabilitation work if the rehabilitation work is not
191 approved as provided in Subsection (4);
192 (E) an expenditure attributable to landscaping or other site features; or
193 (F) an expenditure similar to an expenditure described in Subsections (1)(g)(ii)(A)
194 through (E).
195 (h) (i) "Rehabilitation project" means a project:
196 (A) to rehabilitate a:
197 (I) commercial certified historic building;
198 (II) commercial qualified historic building; or
199 (III) residential certified historic building; and
200 (B) for which a taxpayer claiming a tax credit under this section incurs qualified
201 rehabilitation expenditures.
202 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
203 the division may by rule define the term "project."
204 (i) "Residential certified historic building" means a certified historic building that, as
205 determined by the division, is:
206 (i) primarily used for residential purposes; and
207 (ii) (A) occupied by the owner of the building; or
208 (B) income producing.
209 (j) "Tax credit threshold" means that a taxpayer has made qualified rehabilitation
210 expenditures that total at least $10,000 with respect to each:
211 (i) commercial certified historic building for which the taxpayer claims a tax credit
212 under this section;
213 (ii) commercial qualified historic building for which the taxpayer claims a tax credit

214 under this section; or
215 (iii) residential certified historic building for which the taxpayer claims a tax credit
216 under this section.
217 [(1) (a)] (2) (a) (i) For [tax] taxable years beginning on or after January 1, 1993, [and
218 thereafter] but beginning on or before December 31, 2002, there is allowed to resident
219 individuals, as a tax credit against the income tax due, an amount equal to 20% of qualified
220 rehabilitation expenditures, costing more than $10,000, incurred in connection with [any ] a
221 residential certified historic building.
222 (ii) When qualifying expenditures of more than $10,000 are incurred, the tax credit
223 allowed by [this section] Subsection (2)(a)(i) shall apply to the full amount of expenditures.
224 (b) (i) For taxable years beginning on or after January 1, 2003, a taxpayer subject to
225 taxation under this chapter may claim the following nonrefundable tax credits against the taxes
226 imposed by this chapter as provided in this section:
227 (A) a taxpayer meeting the tax credit threshold for a residential certified historic
228 building may claim a tax credit equal to 20% of the total amount of the taxpayer's qualified
229 rehabilitation expenditures for the residential certified historic building;
230 (B) except as provided in Subsection (3), a taxpayer meeting the tax credit threshold
231 for a:
232 (I) commercial certified historic building may claim a tax credit equal to 20% of the
233 total amount of the taxpayer's qualified rehabilitation expenditures for the commercial certified
234 historic building; or
235 (II) commercial qualified historic building may claim a tax credit equal to 20% of the
236 total amount of the taxpayer's qualified rehabilitation expenditures for the commercial qualified
237 historic building; or
238 (ii) a combination of the tax credits described in Subsections (2)(b)(i)(A) and (B).
239 (3) (a) Notwithstanding Subsection (2)(b)(i)(B), the maximum amount of tax credit
240 that a taxpayer may claim or carry forward during a six-year period is $100,000 for all of the
241 qualified rehabilitation expenditures incurred in connection with each:
242 (i) commercial certified historic building; or
243 (ii) commercial qualified historic building.
244 (b) The six-year period described in Subsection (3)(a) begins on the first day of the first

245 taxable year for which a taxpayer may claim a tax credit under Subsection (2)(b)(i)(B).
246 [(b) All] (4) A taxpayer seeking to claim a tax credit under this section shall:
247 (a) file an application for approval of the taxpayer's qualified rehabilitation
248 expenditures:
249 (i) prior to the completion of the rehabilitation project; and
250 (ii) on a form supplied by the division;
251 (b) obtain:
252 (i) approval for the taxpayers qualified rehabilitation [work to which the credit may be
253 applied shall be approved by the State Historic Preservation Office] expenditures:
254 (A) from the division; and
255 (B) prior to completion of the rehabilitation project [as meeting the Secretary of the
256 Interior's Standards for Rehabilitation so that the office can provide corrective comments to the
257 taxpayer in order to preserve]; and
258 (ii) after completing the rehabilitation project, an authorization form to claim the tax
259 credit:
260 (A) from the division; and
261 (B) on a form provided by the commission; and
262 (c) comply with any requirement of the division to ensure that the historical qualities of
263 the building are preserved.
264 [(c) Any] (5) Subject to Subsection (3), if the amount of a tax credit [remaining] a
265 taxpayer claims under this section exceeds the taxpayer's tax liability for a taxable year, the
266 taxpayer may [be carried] carry forward [to each of] the amount of the tax credit that exceeds
267 the taxpayer's tax liability for a time period that does not exceed five taxable years [following
268 the qualified expenditures].
269 [(d) The commission,] (6) In accordance with Title 63, Chapter 46a, Utah
270 Administrative Rulemaking Act, in consultation with the [Division of State History] division,
271 the commission shall promulgate rules to implement this section.
272 [(2) As used in this section:]
273 [(a) "Certified historic building" means a building that is listed on the National
274 Register of Historic Places within three years of taking the credit under this section or that is
275 located in a National Register Historic District and the building has been designated by the

276 Division of State History as being of significance to the district.]
277 [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable
278 to the rehabilitation and restoration of the physical elements of the building, including the
279 historic decorative elements, and the upgrading of the structural, mechanical, electrical, and
280 plumbing systems to applicable codes.]
281 [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
282 [(A) the taxpayer's personal labor;]
283 [(B) cost of acquisition of the property;]
284 [(C) any expenditure attributable to the enlargement of an existing building;]
285 [(D) rehabilitation of a certified historic building without the approval required in
286 Subsection (1)(b); or]
287 [(E) any expenditure attributable to landscaping and other site features, outbuildings,
288 garages, and related features.]
289 [(c) "Residential" means a building used for residential use, either owner occupied or
290 income producing.]
291 Section 3. Retrospective operation.
292 This act has retrospective operation for taxable years beginning on or after January 1,
293 2003.




Legislative Review Note
as of 1-13-03 7:00 AM

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

Office of Legislative Research and General Counsel