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2017 Legislative Sessions have brought several changes to the State Historic Tax Credit, including how these credits can be used and who is eligible to participate in the program. Confused already? No problem! We are here to give you a quick rundown of everything you need to know.

Change 1: How the Credit can be Applied

As of May 4, 2017, the state preservation tax credit may be applied to business franchise taxes or insurance premium taxes. According to the Texas Historical Commission, “Senate Bill 550, changed Section 171.908(e)  of the Texas Tax Code to permit the credit to be claimed against Texas insurance premium tax by an entity that is subject to that tax under Chapter 221 – 224 of the Insurance Code. A tax credit certificate received by the owner may be transferred to an entity subject to the insurance premium tax in a manner similar to that used for franchise tax credit transfer.”

The purpose of this change is related to recent proposals to eliminate the state franchise tax. The change in the code will protect the program if the legislature does away with the franchise tax in the future.

Change 2: Eligibility of Higher Education Institutions

State institutions of Higher Education are now eligible to claim the Texas state historic tax credit, due to House Bill 1003 passed in the 85th Legislative Session. An institution of higher education or university system as defined by Section 61.003 of the Education Code includes any public technical institute, public junior college, public senior college or university, medical or dental unit, public state college, or other agency of higher education.

What does this mean for higher education?

  • This new bill allows these institutions to use the tax credit to assist in financing capital projects or maintenance work on their historic buildings.
  • The program will provide university systems with a tax credit against Texas franchise taxes or insurance premium taxes equal to 25% of qualified costs expended on the rehabilitation of a historic building.
  • Higher education institutions are eligible to sell the credits they earn to private companies that owe franchise taxes or insurance premium taxes to the Texas Comptroller of Public Accounts.

It is important to note that all higher education projects must follow the same rules as other projects participating in the Texas Historic Preservation Tax Credit program. You can read more about these rules and requirements here.

Do you have specific  questions regarding the Texas Historic Tax Credit program or the changes recently passed in the 85th Legislative Session?

Our team at Archtiexas can help! In addition to architecture, planning and historic preservation, our firm provides consultation to our clients, guiding them through the complexities of federal, state and city tax incentives. we can combine our services to provide any level of assistance needed, including those required for full architectural rehabilitation or restoration.

Some of our current tax incentive projects include Factory Six03, MidElm Lofts,  Purse Building Rehabilitation, Trinity University and St. Edward’s University.

Sources: Texas Historical CommissionPreservation Austin