Commercial Investment Real Estate July/August 2018 | Page 17

often is bolstered by state historic tax credits, which currently exist or are pending in more than 35 states. State HTC programs often mimic the federal HTC in eligibility, credit amount, and process. The HTC is currently 20 percent of qualified rehabilita- tion expenditures, which include most, but not all, of the costs incurred when renovating historic properties. In a much-sim- plified example, if a developer purchases a qualified historic property for $1 million and spends $1 million renovating it, he could qualify for a $200,000 credit offsetting his or her federal taxes. The credits also can be monetized by partnering with those looking to offset federal tax liability for a discounted exchange rate. Using the example above, the developer may partner with a corporation or individual looking to offset income taxable at the federal level and be able to turn the $200,000 in credits into $150,000 in project equity. “More than 43,000 projects leveraging nearly $90 billion in private investment have been completed in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.” New Provisions The statistics cited earlier with regard to the number of projects completed, jobs created, and private dollars invested are indica- tive of the HTC’s performance year-over-year. The program has had a major impact in communities large and small in the 40 years of its existence. Despite the changes undertaken to the HTC during tax reform, it remains a valuable tool without which many historic rehabilitation projects would not be undertaken. The HTC had been taken in a lump sum at project completion prior to Jan. 1, 2018. With a few exceptions, it is now taken over five years following project completion. Given the time value of money, a longer credit disbursement period equates to less value per credit. This is compounded given lower corporate tax rates. Jonathan Shaver, CCIM, is an associate broker with RE/MAX Commercial Brokers in New Orleans, specializing in the disposi- tion of historic commercial properties using state and federal Historic Tax Credits. Contact him at [email protected]. Build Your Own Vacation Giveaway THE CCIM FOUNDATION’S MAJOR FUNDRAISER FOR 2018 One lucky winner will receive a $5,000 voucher for a dream vacation. You choose your destination, your itinerary, and your timetable! CCIM Institute members can enter to win by donating $100 or more to the CCIM Foundation. Winners will be announced at the CCIM Fall Governance Meetings in Chicago, Oct. 7-11. You do not need to be present to win! Please contact [email protected] to get your donation form. Prize sponsored by: Your donation will be tax deductible to the extent allowed by the law. The CCIM Foundation is a 501(c)(3) nonprofit organization. CCIM.COM July | August 2018 15