The new Republican tax law could be damaging to developers who plan to restore historic buildings.
The law altered the federal historic tax credit, which had provided a 20 percent reimbursement for certain costs for projects that rehab historic buildings, according to the Wall Street Journal. This reimbursement will now be spread out across five years instead of one, and experts say this reduces its value.
The initial fear was that Congress would completely eliminate the tax credit, but the weakened version could be damaging as well, developers said.
State politicians in Maryland and Michigan, along with preservationists in New York, are looking for ways to offset the changes at the federal level, which President Ronald Reagan set at 20 percent and praised as an effective way to restore old buildings and increase economic growth.
The credit, overseen by the National Park Service, was launched in 1976 and has helped restore more than 42,000 buildings since then. Credits exceeded $25 billion through 2016.
Developer Don Peebles told the Journal that the change has threatened his plan to turn an old court building in Philadelphia into a boutique hotel, and he is now looking for ways to reduce the cost of the project.
“It’s a 50-50 chance that we would end up having to abandon the project,” he said. [WSJ] – Eddie Small