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Tax Credits

March 25, 2012

The B.A.B. is located in a National Register of Historic Places, Grand-Bates Suburb Historic District and is a Contributing Building as an Industry/Communications Facility. The Landmarks Association successfully filed the paperwork with the Fed’s in August 2009, close to the time we bought this place. That means the property is potentially eligible for State and Federal Historic Tax Credits.

It is also located in a Census Bureau 35% Qualifying Area for the State of Missouri’s Neighborhood Preservation Act (NPA) Tax Credit. That means the property is eligible to participate in the lottery for State Tax Credits.

Those are complicated ways of saying that, if all goes well, we could get some money to help fix stuff. In this case, we are applying for the credits on the cost of the roof repairs and tuck-pointing. For what we spend, we can get a percentage of that cost back in the form of Tax Credits. The Historic Tax Credits could give us back 25% of what we spend. The NPA Tax Credits could give us back 35% of what we spend. Why is all this a worth the hassle? Those credits can be sold for about 80-cents on the dollar. And, we can apply for both tax credits on the same scope of work. That can really add up!

We’ve ruled out going for the Federal Historic Tax Credits. Applicant’s primary residences don’t qualify. We looked into setting up a corporation that would rent back the property to us. We decided that was too complicated.

With the way things are going at our state capital these days, the chance that these state tax credit programs will be around in the coming years is dwindling. We decided to jump in and do some research to see if we can get applications in this year. For both programs, we have to have the application in and approved before starting any work. If approved, we then have to do the work, have receipts and inspections documenting everything. Again, if approved, we will be issued the credits.  The trick? We have to come up with the money to pay for all the work up front before we get the credits to sell. The work has to be completed in 2-years. Work we self-perform doesn’t count. It still looks like it will be a worthwhile investment because we have plenty of things we can spend money to fix around here.

The Historic Tax Credits are a one-time thing. If we are going to go for these, we’ve learned that it is best to hire a consultant that knows how to properly fill out the forms the way the state bureaucrats want to see them. We’ve got a consultant lined up, but we have to decide if we want to move forward with the application. For this credit, we have to come up with and spend, in 2-years, at least the amount we paid for the property.

The NPA credits are handled as a lottery and the application is a bit more straight forward. If we meet the requirements, our application is put in a pot with all the other applicants, and they draw names until they run out of money. In this program, we can reapply every year and the dollars spent are more flexible. The deadline for 2012 was March 15th. We got our application in on March 15th, of course. We’re not sure when we’ll hear back if we were chosen, but hopefully before the, hopefully, long, dry summer roofing season.

Sorry, no pictures in this post. There is some irony, though. I’m procrastinating, spending time writing this post on tax credits when I’m supposed to be doing my taxes.

2 Comments leave one →
  1. tina lahay permalink
    August 21, 2015 9:31 pm

    I live across the street from Tom always wondered, “what did that b.a.b use to be”? today I went over to ask him, he told me the story, and gave me his card to go to the web site. wow tom and sue loved reading about the buildings history past and present. Its people like you and Sue that keep our city alive! thanks and stained glass is beautiful I will be thinking of what the building must have been like in its days, I always do, and will also have dreams about it

    • Tom permalink*
      August 23, 2015 10:34 pm

      Thanks Tina!
      Our favorite stories are those that come from neighbors. At a party we heard from a senior couple; the woman told us that when she was little, she & her friends used to rummage in the alley to find colorful shards of stained glass to take home; then her husband nudged her to tell the “other” story of how she kissed her first boy while hiding in the alcove in the back of our building.

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