Tax Credits

Historic Preservation Tax Credit

This program is administered by the U.S. Department of the Interior, National Park Service. Under the Tax Reform Act of 1986, property owners and long-term lessees became eligible to receive preservation tax credits from rehabilitating historic-designated structures. Specifically, tax incentives are available where certified historic structures are certified as having received rehabilitation to preserve and enhance its historic character.

Eligible Activities:
Eligible uses of this program include the substantial rehabilitation of the following building types: (1) an historic structure listed or eligible to be listed in the National Register of Historic Places; (2) a contributing structure located within the boundaries of a National Register District or an eligible National Register District, or (3) an historic structure designated by state or local statute. All of the eligible building types listed above must be depreciable buildings (i.e. used in trade or business or held for the production of income) and not an owner-occupied residence.

Terms:
This program offers a maximum tax credit of 20 percent for the substantial rehabilitation of historic buildings for commercial, industrial and rental residential purposes, and a 10 percent credit for the substantial rehabilitation for non-residential purposes of structures built before 1936.

The straight-line depreciation period of 27.5 years is for residential property and 31.5 years for non-residential property for the depreciable basis of the rehabilitated structure, less the amount of the tax credit claimed. Under rehabilitation costs and requirements, expenses must exceed the greater of the adjusted basis of the building or $5,000 within a 24-month period. Rehabilitation features must conform to the Secretary of the Interior's Standards for Rehabilitation.

Application Process:
Property owners contact and apply to State Historic Preservation Office (SHPO) for tax credit. The National Park Service (NPS) reviews requests and comments by SHPO and issues the tax credit certification. Certification denials are appealed to the Department of the Interior. Work is to be completed before receiving a certified rehabilitation status.

NPS charges application processing fees for reviewing requests. Projects less than $20,000 are not assessed. For those over $20,000, the schedule is a $250 fee for reviewing all applications, plus $500 for projects costing between $20,000 to $99,999; $800 for those between $100,000 to $499,999; $1,500 for those between $500,000 to $999,999; and $2,500 for those of $1,000,000 or more.

Generally, each rehabilitation certification request on a certified historic structure is considered as a separate project for the purpose of computing the application fee.

Contact:
State Historic Preservation Office
2704 Villa Prom
Oklahoma City, OK 73107
(405) 521-6249

Affordable Housing Tax Credits (LIHTC)

Eligibility:
Tenants in tax credit developments are subject to certain maximum income levels and certain maximum rent levels. Developers must apply and compete for award of tax credits; and are subject to operating rules relating to low-income occupancy percentage, maximum income levels and maximum rent levels.

Benefits:
Encourages private sector to develop affordable housing for low-income households.

Nature of Program:
AHTC is a federal program created by the 1986 Tax Reform Act. Its purpose is to assist in the creation and preservation of affordable housing for low-income households by making a tax credit available to developers of low-income housing. Oklahoma has approximately $4 million dollars of tax credits to provide per year. The dollar-for-dollar tax liability reduction can be taken for each year of a ten (10) year period. Investors typically sell the credit to a syndicate or bank and use it as equity for the development. Having a AHTC also makes it easier to obtain financing

The purpose behind the credit is to encourage the private sector not only to develop but also to manage the nation’s supply of affordable housing. Therefore, the law also contains a comprehensive set of operating rules that must be complied with generally for a minimum 30 year period. Those relate to occupancy and maximum income levels (20/50 or 40/60) and maximum rent levels (30 percent of either 50 percent or 60 percent of the median area income).

Contact:
Oklahoma Housing Finance Agency
100 N.W. 63^rd Street, Suite 200
Oklahoma City, OK 73116
(405) 419-8269
FAX: (405) 419-9269

Single-Family Mortgage Credit Certificate Program

Eligibility:
Applicants must be low- to moderate-income families and generally be first time homebuyers having not owned a home during the three year period prior to execution of the mortgage. Applicants must purchase a single-family residence within a program area and the applicants must occupy the home as a principal residence. The mortgage loan financed must be a new mortgage and not replace a prior mortgage on the home. Certain home price limitations and other restrictions apply.

Benefits:
Provides assistance to first-time homebuyers with regard to their home purchase and stimulates home sales in certain identified areas of economic need.

Nature of Program:
A qualifying homebuyer receives a Mortgage Credit Certificate upon completion of their home purchase. The buyer is entitled to a federal income tax credit equaling 50 percent of the interest paid on the first $40,000 of the buyer’s home loan during each tax year. The buyer is limited by Federal Law to a maximum of $2,000 per year income tax credit. For example, if a homebuyer paid $4,000 of interest on a home loan during the tax year, then the homebuyer would receive an income tax credit of $2,000, and would pay $2,000 less in federal income taxes for the year. This credit reoccurs each year the homebuyer continues to live in the home and pay on the loan. The amount of tax credit will vary depending on the interest rate on each loan. Other limitations may apply.

Availability:
The program is available in various counties throughout the State. Certificates available are limited and provided to qualifying homebuyers on a first-come, first-served basis.

Contact:
Applicants should contact their realtor, homebuilder, or lender of their choice; or
MCC Administration Corporation
P.O. Box 1568
Norman, OK 73070
(405) 364-6565
(405) 364-4779 Fax