Modification Tax Credit Preservation Historic Structures

The act modifies the income tax credit for qualified costs incurred in preservation of historic structures (credit) by:

• Modifying the requirement that a qualified commercial or residential structure be at least 50 years old to instead require a qualified commercial or residential structure to be at least 30 years old;
• Extending the period for which a taxpayer may claim the credit through income tax years commencing prior to January 1, 2037;
• Extending the period for which the Colorado office of economic development may reserve the credit through December 31, 2032;
• Limiting the credit to apply to past rehabilitation expenditures that occurred 12, rather than 24, months prior to the submission of an application for the credit on or after January 1, 2026;
• Preventing a person from submitting an application for the credit on or after January 1, 2025, in connection with an already completed rehabilitation project;
• Increasing the amount of the credit that may be awarded for residential rehabilitation expenditures from $50,000 to $100,000, beginning with credits that are awarded on or after January 1, 2025;
• Removing the 5% increase in the percentage of applicable rehabilitation expenses incurred in a rehabilitation in a disaster area under the credit for rehabilitations made in connection with an application for the credit submitted on or after January 1, 2025;
• Creating the commercial historic preservation tax credit program cash fund that consists of gifts, grants, donations, any revenue generated by the issuance fee charged in connection with the issuance of a credit, and any other money that the general assembly credits to the fund;
• For tax years commencing on or after January 1, 2027, allowing the credit for qualified residential structures to be refundable rather than able to be carried forward; and
• For calendar years commencing on or after January 1, 2025, but before January 1, 2030, establishing a second income tax credit pool of up to $5 million annually that is reserved for an owner of a qualified commercial structure that is rehabilitated so that at least 50% of the square footage of the qualified commercial structure will be net new housing rental units, and, if the qualified commercial structure is subject to a deed restriction that requires the owner to lease rental housing to individuals with an income below a certain amount, the taxpayer claiming the credit may claim 5% more of the qualified expenditures.

To implement the act, for the 2024-25 state fiscal year:

• $74,244 is appropriated from the general fund to the office of the governor for use by economic development programs for general incentives and marketing by the economic development commission; and
• $54,419 is appropriated from the general fund to the department of higher education for use by history Colorado for the office of archeology and historic preservation.

EFFECTIVE August 7, 2024
(Note: This summary applies to this bill as enacted.)