Contaminated Land Income Tax & Property Tax Credit

Under current law, an affordable housing developer in Colorado can qualify for state property tax exemptions for 15 years and federal income tax credits for 30 years. The act allows affordable housing projects to receive the Colorado state property tax exemptions for an extended period of 15 years to match the period available under federal law.

Under current law, the tax credit for environmental remediation of contaminated land (commonly referred to as the Brownfield credit) allows taxpayers to claim income tax credits for voluntary cleanup of contaminated land, known as brownfield, located in Colorado. Taxpayers can claim a transferable credit equivalent to 40% of the first $750,000 spent on remediation and 30% of the next $750,000 spent, for a maximum credit of $525,000 on remediation costs of $1.5 million or more. In addition, a "qualified entity", which is a county, municipality, or private nonprofit entity, is allowed an essentially identical transferable expense amount for expenses incurred in performing approved environmental remediation that can be transferred to a taxpayer as an income tax credit. The Colorado department of public health and environment (CDPHE) is authorized to certify a total of $3 million in both tax credits for each income tax year. The act:

• Extends the tax credit, which is set to expire on January 1, 2023, to January 1, 2025, for an additional 2 years;
• Increases the annual total cap on tax credits from $3 million to $5 million for calendar year 2022 and after;
• Expands the definition of "qualified entity" to include school districts, charter schools, special districts, institutions of higher education, and other quasi-governmental entities;
• Allows a taxpayer whose credit is tied to remediation of a site in a rural community to claim a credit equivalent to 50% of the first $750,000 spent on remediation and 40% of the next $750,000 spent;
• Eliminates some restrictions that taxpayers have on the transferability of credits, including a restriction that requires any transfer to occur within the first 2 years of receiving the tax credit and the requirement that the transferee certify that the taxpayer satisfied statutory requirements; and
• Requires a taxpayer and a transferee of a tax credit or transferable expense amount to jointly file a copy of the transfer agreement with CDPHE, specifies that such filing perfects the transfer, and clarifies that the transferee and the department of revenue can rely upon the certification by CDPHE of the ownership and the amount of the tax credit as being accurate.
  (Note: This summary applies to this bill as enacted.)