On January 8, 2013, the Governor of the State of Michigan signed a bill creating a historic resource rehabilitation tax credit. Such tax credit permits certain qualified taxpayers with a rehabilitation plan certified after December 31, 2007 (or before January 1, 2008 under the former single business tax) for the rehabilitation of a historic resource for which a certificate of completion has been issued to receive a tax credit equal to 25 percent of certain eligible qualified expenditures incurred during specified time periods. This tax credit is taken in the year in which the certificate of completed rehabilitation of the historic resource is issued.
This tax credit is nonrefundable, but may be carried forward for 10 years, and is reduced by the amount of the federal tax credit, if any, received under Section 47(a)(2) of the Internal Revenue Code for the same qualified expenditures. If the taxpayer’s qualified expenditures are eligible for the federal tax credit, then the taxpayer must claim and receive that credit in order to receive the state tax credit or must enter into an agreement with the Michigan State Housing Development Authority (the “Authority”). If the certificate of completed rehabilitation is issued after December 31, 2008, then the qualified taxpayer may irrevocably assign all or any portion of such state tax credit using certain forms provided by the state.
To be eligible for the historic resource rehabilitation tax credit, a qualified taxpayer must receive certification by the Authority that the historic significance, the rehabilitation plan, and the completed rehabilitation meets several criteria, including that the historic resource is either individually listed on a national or state historic register, or is a contributing resource located within a historic district listed on the national or state historic register, or designated by a local unit of government.
The Authority may inspect the historic resource and may revoke the certification of completed rehabilitation if the rehabilitation was not undertaken as represented in the rehabilitation plan or if unapproved alterations are made during the five years after the credit was claimed.
Unless otherwise agreed with the Authority, for tax years beginning after December 31, 2008, if the certificate of completed rehabilitation is revoked, or the historic resource is sold, less than five years after the historic resource is placed into service, then all or a portion of the tax credit will be recaptured in the year of revocation or sale.