TAX CREDITS FOR “FIXING IT UP”

There’s a unique tax credit that can reduce your tax bill for incurring “rehabilation expenditures.” The rehabilitation investment tax credit equals 20 percent of the qualified rehabilitation expenses (QRE) for certified historic structures and 10 percent of QRE for qualified rehabilitated buildings first placed in service before 1936.

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A building and its structural components constitute a qualified rehabilitated building if:

(1) substantially rehabilitated and

(2) placed in service before the rehabilitation begins. Property other than a certified historic structure must also satisfy

(3) a “wall retention” test,

(4) an age requirement, and

(5) a location of rehabilitation requirement. Property is considered substantially rehabilitated only if the expenditures during a self-selected 24-month measurement period (60-month period for phased rehabilitation) are more than the greater of the adjusted basis of the property or $5,000.

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Energy Investment Credit

Another unique tax credit — a direct reduction of the tax bill rather than a deduction from the income upon which that tax bill is computed — is available for so-called “energy” property. The business energy investment credit is equal to 10 percent of the basis of energy property placed in service during the year. (No energy credit is allowed for that portion of the basis of property for which rehabilitation investment credit is claimed.)

Energy property includes equipment that uses solar energy to generate electricity, to heat or cool a structure or to provide solar process heat. It also includes equipment that produces, distributes, or uses energy derived from geothermal deposits, with some restrictions. To qualify for the credit, the equipment must be depreciable (or amortizable) and must meet performance and quality standards. No partial deductions are available, so a retailer or facility operator must complete the construction, reconstruction, or erection of the property. If the property is acquired, your business must be the first to use it.

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So while you are profiting from the tax credit, save money on energy bills as well.  Its a WIN-WIN situation.

If you are looking for a tax break, and your home or business needs a little face lift, call HiCaliber.

435-674-9338 and find us on facebook at https://www.facebook.com/HiCaliber?ref=br_tf for promotions and updates.

 

 

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