NY TSB-A-21(1)I Income Tax 2021-11-23

Does New York's $5 million Rehabilitation of Historic Properties Credit cap apply per structure or per application when several related historic buildings are filed on one application?

Short answer: Per structure. The $5 million cap on the Rehabilitation of Historic Properties Credit applies on a per-certified-historic-structure basis, not per application. Because Tax Law § 606(oo)(1)(A) sets the credit at 100% of the federal IRC § 47 credit allowed for each certified historic structure, the fact that several functionally-related structures must be filed under one application and project number is irrelevant to the cap.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A partnership's project includes several functionally-related historic structures, each a certified historic structure on the National Register. Because they're related, the State Historic Preservation Office and the National Park Service required them to be submitted on one application with one project number. The partnership asked whether New York's $5 million cap on the Rehabilitation of Historic Properties Credit applies per application (one $5M cap for the whole project) or per structure (a $5M cap for each building).

The Office of Counsel concluded the cap applies per structure. Tax Law § 606(oo)(1)(A) sets the New York credit at 100% of the federal IRC § 47 credit allowed for "a certified historic structure," capped at $5 million. Because the credit is computed structure-by-structure (as the federal credit defines a qualified rehabilitated building), the cap follows each structure. The requirement to file multiple structures on a single application is an administrative formality and does not collapse them into one capped credit.

What this means for you

Developers of multi-building historic projects

A project with several certified historic structures can claim up to $5 million for each structure, even though preservation rules force them onto one application. This can substantially increase available New York credit on large rehabilitation projects.

Accountants and tax-credit advisors

Compute the New York credit (and the $5M cap) the same way the federal IRC § 47 credit is computed — per certified historic structure. Don't let the single-application requirement lead you to apply one cap to the whole project.

Common questions

Q: We had to file all our buildings on one application. Is our cap $5M total?
A: No. The $5M cap applies to each certified historic structure separately.

Q: Why does the structure-by-structure rule apply?
A: New York's credit equals 100% of the federal IRC § 47 credit, which is computed per qualified rehabilitated building/structure.

Q: Does the single project number matter?
A: No. The opinion says the single-application requirement is irrelevant to how the cap applies.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

Statutes:
- Tax Law § 606(oo)(1)(A)
- IRC § 47(a), (c)(1), (c)(3)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income-ao-2021.htm
Opinion: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income/21-1i.htm
Printer-friendly PDF: https://www.tax.ny.gov/pdf/advisory_opinions/income/a21-1i.pdf

Original ruling text

Income Tax
November 23, 2021
Office of Counsel

The Department of Taxation and Finance received a Petition for Advisory Opinion from REDACTED (“Petitioner”) asking whether the Rehabilitation of Historic Properties Credit cap applies on a per structure basis or a per application basis. We conclude that the Rehabilitation of Historic Properties Credit cap applies on a per structure basis.

Facts

Petitioner is a partnership that will own a project that contains several functionally-related historical structures. Each structure is, or will be, a certified historic structure by virtue of its listing on the National Register of Historic Places, individually or as a contributing part of a historic district. Since all of the structures are historically functionally-related, they must be submitted on one application and assigned one project number by the State Historic Preservation Office and the National Park Service.

Analysis

The Rehabilitation of Historic Properties Credit is available to taxpayers for expenses related to the rehabilitation of certified historic structures in New York State. The issue here is whether the requirement to file all structures under one application causes the tax credit cap to be applied on a per application basis or on a per structure basis. One application may consist of multiple buildings and structures. Tax Law § 606(oo)(1)(A) states:

For taxable years beginning on or after January first, two thousand ten and before January first, two thousand twenty-five, a taxpayer shall be allowed a credit as hereinafter provided, against the tax imposed by this article, in an amount equal to one hundred percent of the amount of credit allowed the taxpayer with respect to a certified historic structure under internal revenue code section 47(c)(3), determined without regard to ratably allocating the credit over a five-year period
as required by subsection (a) of such section 47, with respect to a certified historic structure located within the state. Provided, however, the credit shall not exceed five million dollars.

The New York State Rehabilitation of Historic Properties Credit is based on the Federal rehabilitation credit, IRC § 47. IRC § 47 (a) allows a taxpayer to claim a credit for a qualified rehabilitation building, which is defined as “any building (and its structural components) if— (i) such building has been substantially rehabilitated, (ii) such building was placed in service before the beginning of the rehabilitation, (iii) such building is a certified historic structure, and (iv) depreciation (or amortization in lieu of depreciation) is allowable with respect to such building.” IRC § 47 (c)(1).

As Tax Law § 606(oo)(1)(A) specifically calculates the credit as 100% of the amount of the federal credit allowed for a certified historic structure, the credit is applied on a per structure basis, as that structure is defined for purposes of the federal credit. The fact that multiple structures are required to be submitted on one application is irrelevant.

Deborah R. Liebman
Deputy Counsel

Note: An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts set forth therein and is binding on the Department only with respect to the person or entity to whom it is issued and only if the person or entity fully and accurately describes all relevant facts. An Advisory Opinion is based on the law, regulations, and Department policies in effect as of the date the Opinion is issued or for the specific time period at issue in the Opinion. The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning.