Investment Historic Tax Credits White Paper

Overview:  The Federal Historic Preservation Tax Incentives (HTC) program provides a 20% income tax credit for the rehabilitation of historic, income-producing buildings that are determined by the Secretary of the Interior, through the National Park Service, to be “certified historic structures.”

The State Historic Preservation Officer and the National Park Service review the rehabilitation work to ensure that it complies with the Secretary’s Standards for Rehabilitation.

The HTC is intended to leverage private investment in rehabilitation projects which are costlier and riskier than new construction—and thus harder to finance—but are important to the revitalization of a community. Developers typically transfer the historic tax credits to investors in exchange for equity.

Investor equity lowers the amount of debt that the developer needs to finance the project, while making lenders more comfortable with the property’s loan-to-value and the size of the loan needed.  In this way, the tax credit effectively draws the private capital—both equity and debt—needed to make the project more feasible.

The table below shows the impact of HTC funding on a project.

Sources of Funds With HTC


NMTC Equity                    $   5,405,112

Fed HTC Equity                  $   2,499,171

State HTC Equity               $      614,500

Owner Equity                     $   1,250,000

Hard Debt                           $   6,082,454

Grants                                 $      834,000


  Total                                   $ 16,685,237



Sources of Funds Without HTC


NMTC Equity                     $  5,405,112

Owner Equity                     $  2,575,000

Hard Debt                           $  7,870,000

Grants                                 $      834,000




  Total                                   $ 16,685,237