Whether you’re planning to relocate, expand, or repurpose a historic building for business use, the rehabilitation tax credit offers a powerful financial incentive. With up to 20% back on qualified expenditures, this federal business tax credit can help offset the cost of improvements that meet specific historic preservation criteria.At THF (Thomas Howell Ferguson CPAs), our team helps organizations across industries take advantage of this and other strategic tax credits for business growth.

What Is the Rehabilitation Tax Credit?

The rehabilitation tax credit allows owners to claim 20% of qualified rehabilitation expenditures (QREs) for certified historic buildings. These buildings must:

• Be listed on the National Register of Historic Places or certified by the National Park Service
  
• Be depreciable (income-producing) structures—not personal residences
  
• Undergo “substantial” rehabilitation, generally exceeding $5,000 or the purchase cost
  

Although often overlooked, this incentive is one of the most valuable business tax credits available for property upgrades and long-term investment.

What Expenses Qualify for the Credit?

Qualified rehabilitation expenditures may include:

• Restoration of structural elements
  
• Electrical, plumbing, HVAC, and interior upgrades
  
• Other capital improvements to business-use areas
  

Excluded expenses include land acquisition, building enlargements, and furnishings. The 20% credit is applied ratably over five years (4% annually), starting the year the building is placed in service.

Permanent Changes Under the TCJA

The Tax Cuts and Jobs Act (TCJA) modified how the credit is claimed but did not eliminate it. Key updates include:

• Spreading the 20% credit over five years (instead of one)
  
• Eliminating the older 10% credit for non-historic buildings built before 1936
  

While many individual tax provisions of the TCJA are set to expire after 2025, these changes to the rehabilitation credit are permanent, offering long-term planning certainty.

Additional Benefits Beyond Federal Credits

Businesses may also benefit from state and local credits, energy efficiency deductions, or location-based tax incentives when improving or repurposing properties. These can often be stacked with the rehabilitation tax credit, creating substantial savings.

At THF CPAs, we take a strategic approach—evaluating all potential business tax credits to help maximize your return on investment.

Why Work with Thomas Howell Ferguson CPAs?

Claiming the rehabilitation credit requires thorough documentation and compliance with IRS and National Park Service standards. The team at THF (Thomas Howell Ferguson CPAs) helps you:

• Identify eligible properties and expenditures
  
• Work with construction professionals and architects
  
• Ensure your project meets technical preservation requirements
  
• Maintain audit-ready cost records and documentation
  

Whether you’re pursuing a new business tax credit strategy or looking to enhance your real estate portfolio, THF CPAs can help guide your investment.

Let’s Talk About Your Next Project

If you’re considering a property rehabilitation and want to explore the tax credit for small businesses and larger enterprises alike, we’re here to help. Reach out to THF CPAs for a personalized consultation and discover how business tax credits can support your next phase of growth.

📞 Contact us today or visit www.THF.cpa to learn more.