Colorado was actually one of the first states to pioneer economic competition through the use of tax credits by being the second state to adopt a tax credit program for historic preservation back in 1991, but the law remained largely unchanged until recently.
House Bill 14-1311, the Colorado Job Creation and Main Street Revitalization Act, was signed into law on May 14th and it offers tax credits designed to help bring more economic development back to historic commercial buildings and main streets. This bill was also enacted to update Colorado’s preexisting tax credit program to be more competitive for development against other states, which already had similar programs.
These tax credits are available for qualified expenses beginning in July of 2015 and will discontinue in 2020. They are also divided into Large and Small categories, but first let us look at the requirements for either kind of project.
- Only properties designated as historic at the local, state, or national level are eligible
- All projects must be certified by the State Historic Preservation Office
- A minimum expenditure of 25% of the original purchase price of the property (minus the value of the land) must be made
- Projects with Qualified Rehabilitation Expenses over $250k require third party audits
- Projects located in state/federal disaster designations will get an additional 5% state tax credit if in service within 8 years following such designation.
Now let us take a look at some specifics depending on the category.
Small Historic Rehabilitation Projects
- Less than $1 million tax credit
- Projects below $500k in Qualified Rehabilitation Expenses get a 30% state tax credit on those expenses
- Projects between $500k-$1million in Qualified Rehabilitation Expenses get a 25% state tax credit on those expenses
Large Historic Rehabilitation Projects
- More than $1 million tax credit anticipated
- Projects will receive a 20% state tax credit for all Qualified Rehabilitation Expenses
With these tax credit opportunities in mind, now is a great time to plan or think about starting or expanding your business into the revitalizing historic buildings and main streets of Colorado. To get started, contact the Law Office of E.C. Lewis PC, home of your Denver Business Lawyer, Elizabeth Lewis, 720-258-6647 or email her at Elizabeth.Lewis@eclewis.com.