1     
HISTORIC REHABILITATION TAX CREDIT AMENDMENTS

2     
2023 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Carl R. Albrecht

5     
Senate Sponsor: ____________

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the tax credit related to expenditures for rehabilitating a historic
10     building.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms;
14          ▸     expands eligibility for the tax credit to include rehabilitation expenditures made for
15     certain historic commercial buildings;
16          ▸     provides that a person may assign all or a portion of a historic rehabilitation tax
17     credit; and
18          ▸     makes technical and conforming changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          This bill provides a special effective date.
23     Utah Code Sections Affected:
24     AMENDS:
25          59-7-609, as enacted by Laws of Utah 1995, Chapter 42
26          59-10-1006, as renumbered and amended by Laws of Utah 2006, Chapter 223
27     

28     Be it enacted by the Legislature of the state of Utah:
29          Section 1. Section 59-7-609 is amended to read:
30          59-7-609. Historic preservation credit.
31          (1) As used in this section:
32          (a) "Certified historic building" means a building that:
33          (i) is listed on the National Register of Historic Places within three years of taking the
34     credit under this section; or
35          (ii) (A) is located in a National Register Historic District; and
36          (B) has been designated by the State Historic Preservation Office as being of
37     significance to the district.
38          (b) "Commercial" means a building used to conduct business.
39          (c) "Historic preservation credit" means the tax credit described in Subsection (2).
40          (d) "Qualified claimant" means:
41          (i) (A) a taxpayer that qualifies for a historic preservation credit; or
42          (B) a person that is assigned a historic preservation credit; and
43          (ii) has a written certification as provided in Subsection (3) or (4).
44          (e) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
45     the rehabilitation and restoration of the physical elements of the building.
46          (ii) "Qualified rehabilitation expenditures" includes the historic decorative elements,
47     and the upgrading of the structural, mechanical, electrical, and plumbing systems.
48          (iii) "Qualified rehabilitation expenditures" does not include expenditures related to:
49          (A) the taxpayer's personal labor;
50          (B) cost of acquisition of the property;
51          (C) any expenditure attributable to the enlargement of an existing building;
52          (D) rehabilitation of a certified historic building without the approval required in
53     Subsection (3); or
54          (E) any expenditure attributable to landscaping and other site features, outbuildings,
55     garages, and related features.
56          (f) "Residential" means a building used for residential use, either owner occupied or
57     income producing.
58          [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed
59     to a taxpayer subject to Section 59-7-104, as a credit against the tax due,] A taxpayer may
60     claim a nonrefundable tax credit in an amount equal to 20% of qualified rehabilitation
61     expenditures, [costing] if the qualified rehabilitation expenditures:
62          (i) cost more than $10,000[,]; and
63          (ii) are incurred in connection with any residential or commercial certified historic
64     building. [When qualifying expenditures of more than $10,000 are incurred, the credit allowed
65     by this section shall apply to the full amount of expenditures.]
66          [(b) All rehabilitation work to which the credit may be applied shall be approved by the
67     State Historic Preservation Office prior to completion of the rehabilitation project as meeting
68     the Secretary of the Interior's Standards for Rehabilitation so that the office can provide
69     corrective comments to the taxpayer in order to preserve the historical qualities of the
70     building.]
71          (b) (i) A qualified claimant may assign all or a portion of a historic preservation credit
72     to which the qualified claimant is entitled.
73          (ii) There is no limit on the number of transactions for the assignment of all or a
74     portion of a historic preservation credit.
75          (3) (a) The office shall issue a historic preservation credit certificate to a taxpayer if the
76     office:
77          (i) approves all rehabilitation work for which a taxpayer may claim a tax credit as
78     meeting the Secretary of the Interior's Standards for Rehabilitation before completion of the
79     rehabilitation project so that the office can provide corrective comments to the taxpayer to
80     preserve the historic qualities of the building;
81          (ii) determines that the rehabilitation project conforms with the approved rehabilitation
82     work; and
83          (iii) verifies the property is a residential or commercial certified historic building and
84     the amount of the taxpayer's qualified rehabilitation expenditures.
85          (b) The tax credit certificate shall list the amount of the historic preservation credit that
86     the taxpayer is eligible to claim.
87          (4) (a) To assign a historic preservation credit to another person, a qualified claimant
88     shall provide a written notice to the State Historic Preservation Office, in a form established by
89     the State Historic Preservation Office, that includes:
90          (i) the qualified claimant's written certificate and other proof that the qualified claimant
91     is assigning all or a portion of the historic preservation credit to which the qualified claimant is
92     entitled;
93          (ii) the amount of the historic preservation credit that the qualified claimant is
94     assigning; and
95          (iii) contact information for the person to whom the qualified claimant is assigning all
96     or a portion of the historic preservation tax credit.
97          (b) If the qualified claimant meets the requirements of Subsection (4)(a), the State
98     Historic Preservation Office shall issue an assigned historic preservation credit certificate to the
99     person identified by the qualified claimant for the amount specified in the qualified claimant's
100     written notice described in Subsection (4)(a).
101          (5) A person who is issued a historic preservation credit certificate in accordance with
102     Subsection (4) may claim the historic preservation credit as if:
103          (a) the person had met the requirements of this section to claim the historic
104     preservation credit, if the person files a return under this chapter; or
105          (b) the person had met the requirements of Section 59-10-1006 to claim the historic
106     preservation credit under Section 59-10-1006, if the person files a return under Chapter 10,
107     Individual Income Tax Act.
108          (6) (a) The office shall issue a historic preservation credit certificate to a qualified
109     claimant that assigns a historic preservation credit for any remaining amount of the historic
110     preservation credit that was not assigned; or
111          (b) if there is no credit remaining, the office shall remove the qualified claimant from
112     the list of qualified claimants sent to the commission according to Subsection (8).
113          [(c)] (7) [Any amount of credit remaining may be carried forward to each of the five
114     taxable years following the qualified expenditures.] A qualified claimant may carry forward the
115     amount of the historic preservation credit that exceeds the qualified claimant's liability for five
116     taxable years after the year in which the qualified claimant claims a tax credit under this
117     section.
118          (8) The office shall provide the with commission an electronic report that includes for
119     each qualified claimant to which the office issued a historic preservation credit certificate under
120     this section for a taxable year:
121          (a) the name of the qualified claimant;
122          (b) the identifying information of the qualified claimant; and
123          (c) the amount of the historic preservation credit that the qualified claimant is eligible
124     to claim.
125          (9) A qualified claimant shall retain a certificate issued under this section as described
126     in Section 59-1-1406.
127          [(d)] (10) The commission, in consultation with the [Division of State History] State
128     Historic Preservation Office, shall [promulgate rules] make rules to implement this section.
129          [(2) As used in this section:]
130          [(a) "Certified historic building" means a building that is listed on the National
131     Register of Historic Places within three years of taking the credit under this section or that is
132     located in a National Register Historic District and the building has been designated by the
133     Division of State History as being of significance to the district.]
134          [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable
135     to the rehabilitation and restoration of the physical elements of the building, including the
136     historic decorative elements, and the upgrading of the structural, mechanical, electrical, and
137     plumbing systems to applicable codes.]
138          [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
139          [(A) the taxpayer's personal labor;]
140          [(B) cost of acquisition of the property;]
141          [(C) any expenditure attributable to the enlargement of an existing building;]
142          [(D) rehabilitation of a certified historic building without the approval required in
143     Subsection (1)(b); or]
144          [(E) any expenditure attributable to landscaping and other site features, outbuildings,
145     garages, and related features.]
146          [(c) "Residential" means a building used for residential use, either owner occupied or
147     income producing.]
148          Section 2. Section 59-10-1006 is amended to read:
149          59-10-1006. Historic preservation tax credit.
150          (1) As used in this section:
151          (a) "Certified historic building" means a building that:
152          (i) is listed on the National Register of Historic Places within three years of taking the
153     credit under this section; or
154          (ii) (A) is located in a National Register Historic District; and
155          (B) has been designated by the State Historic Preservation Office as being of
156     significance to the district.
157          (b) "Commercial" means a building used to conduct business.
158          (c) "Historic preservation credit" means the tax credit described in Subsection (2).
159          (d) "Qualified claimant" means:
160          (i) (A) a claimant, estate, or trust that qualifies for a historic preservation credit; or
161          (B) a person that is assigned a historic preservation credit; and
162          (ii) has a written certification as provided in Subsection (3) or (4).
163          (e) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
164     the rehabilitation and restoration of the physical elements of the building, including the historic
165     decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing
166     systems to applicable codes.
167          (ii) "Qualified rehabilitation expenditures" does not include expenditures related to:
168          (A) the taxpayer's personal labor;
169          (B) cost of acquisition of the property;
170          (C) any expenditure attributable to the enlargement of an existing building;
171          (D) rehabilitation of a certified historic building without the approval required in
172     Subsection (3); or
173          (E) any expenditure attributable to landscaping and other site features, outbuildings,
174     garages, and related features.
175          (f) "Residential" means a building used for residential use, either owner occupied or
176     income producing.
177          [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed
178     to a claimant, estate, or trust,] A claimant, estate, or trust may claim as a nonrefundable tax
179     credit [against the income tax due,] in an amount equal to 20% of qualified rehabilitation
180     expenditures, [costing] if the qualified rehabilitation expenditures:
181          (i) cost more than $10,000[,]; and
182          (ii) are incurred in connection with any residential or commercial certified historic
183     building. [When qualifying expenditures of more than $10,000 are incurred, the tax credit
184     allowed by this section shall apply to the full amount of expenditures.]
185          [(b) All rehabilitation work to which the tax credit may be applied shall be approved
186     by the State Historic Preservation Office prior to completion of the rehabilitation project as
187     meeting the Secretary of the Interior's Standards for Rehabilitation so that the office can
188     provide corrective comments to the claimant, estate, or trust in order to preserve the historical
189     qualities of the building.]
190          (b) (i) A qualified claimant may assign all or a portion of a historic preservation credit
191     to which the qualified claimant is entitled.
192          (ii) There is no limit on the number of transactions for the sale or assignment of all or a
193     portion of a historic preservation credit under this section.
194          (3) (a) The office shall issue a historic preservation credit certificate to a claimant,
195     estate, or trust if the office:
196          (i) approves all rehabilitation work for which a claimant, estate, or trust may claim a
197     tax credit as meeting the Secretary of the Interior's Standards for Rehabilitation before
198     completion of the rehabilitation project so that the office can provide corrective comments to
199     the taxpayer to preserve the historic qualities of the building;
200          (ii) determines that the rehabilitation project conforms with the approved rehabilitation
201     work; and
202          (iii) verifies the property is a residential or commercial certified historic building and
203     the amount of the taxpayer's qualified rehabilitation expenditures.
204          (4) (a) To assign a historic preservation credit to another person, a qualified claimant
205     shall provide written notice to the State Historic Preservation Office, in a form established by
206     the State Historic Preservation Office, that includes:
207          (i) the qualified claimant's written certificate and other proof that the qualified claimant
208     is assigning all or a portion of the historic preservation credit to which the qualified claimant is
209     entitled;
210          (ii) the amount of the historic preservation credit that the qualified claimant is
211     assigning; and
212          (iii) contact information for the person to whom the qualified claimant is assigning all
213     or a portion of the historic preservation credit.
214          (b) If the qualified claimant meets the requirements of Subsection (4)(a), the State
215     Historic Preservation Office shall issue an assigned historic preservation credit certificate to the
216     person identified by the qualified claimant for the amount specified in the written notice
217     described in Subsection (4)(a).
218          (5) A person who is issued a historic preservation credit certificate in accordance with
219     Subsection (4)(b) may claim the historic preservation credit as if:
220          (a) the person had met the requirements of this section to claim the historic
221     preservation credit, if the person files a return under this chapter; or
222          (b) the person had met the requirements of Section 59-7-609 to claim the historic
223     preservation credit under Section 59-7-609, if the person files a return under Chapter 7,
224     Corporate Franchise and Income Taxes, Chapter 8, Gross Receipts Tax on Certain
225     Corporations Not Required to Pay Corporate Franchise or Income Tax Act, or Chapter 9,
226     Taxation of Admitted Insurers.
227          [(c) Any amount of tax credit remaining may be carried forward to each of the five
228     taxable years following the qualified expenditures.]
229          (6) (a) The office shall issue a historic preservation credit certificate to a qualified
230     claimant that assigns a historic preservation credit for any remaining amount of the historic
231     preservation credit that was not assigned; or
232          (b) if there is no credit remaining, the office shall remove the qualified claimant from
233     the list of qualified claimants sent to the commission according to Subsection (8).
234          (7) A qualified claimant may carry forward the amount of the historic preservation
235     credit that exceeds the qualified claimant's liability for five taxable years after the year in which
236     the qualified claimant claims a tax credit under this section.
237          (8) The office shall provide the commission with an electronic report that includes for
238     each qualified claimant to which the office issued a historic preservation credit certificate under
239     this section for a taxable year:
240          (a) the name of the qualified claimant;
241          (b) the identifying information of the qualified claimant; and
242          (c) the amount of the historic preservation credit that the qualified claimant is eligible
243     to claim.
244          [(d)] (9) The commission, in consultation with the Division of State History, shall
245     promulgate rules to implement this section.
246          [(2) As used in this section:]
247          [(a) "Certified historic building" means a building that is listed on the National
248     Register of Historic Places within three years of taking the credit under this section or that is
249     located in a National Register Historic District and the building has been designated by the
250     Division of State History as being of significance to the district.]
251          [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable
252     to the rehabilitation and restoration of the physical elements of the building, including the
253     historic decorative elements, and the upgrading of the structural, mechanical, electrical, and
254     plumbing systems to applicable codes.]
255          [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
256          [(A) a claimant's, estate's, or trust's personal labor;]
257          [(B) cost of acquisition of the property;]
258          [(C) any expenditure attributable to the enlargement of an existing building;]
259          [(D) rehabilitation of a certified historic building without the approval required in
260     Subsection (1)(b); or]
261          [(E) any expenditure attributable to landscaping and other site features, outbuildings,
262     garages, and related features.]
263          [(c) "Residential" means a building used for residential use, either owner occupied or
264     income producing.]
265          Section 3. Effective date.
266          This bill takes effect for a taxable year beginning on or after January 1, 2024.