Finalized Rehabilitation Credit Regulations And COVID-19 Extensions

The Rehabilitation Tax Credit (Internal Revenue Code's Section 47) is a tax incentive for investors to renovate and restore old and historic buildings within cities and towns. The purpose of the credit is to promote historic structures' rehabilitation; therefore, related building reconstruction costs, including new construction, are applicable under the credit.

Under the Tax Cuts and Jobs Act (TCJA), signed in December 2017, the Internal Revenue Service (IRS) introduced amendments to the rehabilitation tax credit to clarify the tax law and determine how the credit should be allocated. These proposed changes were made to simplify the credit calculation and allow taxpayers to claim the credit over a five-year period.