At BankRI, we understand the importance of supporting the historic preservation of buildings within the State of Rhode Island. That's why we have invested time and resources to support important new Historic Tax Credit Legislation.
The State of Rhode Island enacted Historic Tax Credit legislation effective January 1, 2002. This legislation provides tax credits to persons who restore certified historic structures in accordance with the standards set by the Secretary of the U.S. Department of the Interior, as certified by the Rhode Island Historical Preservation and Heritage Commission (the "Commission"). The legislation also allows tax credits to be bought and sold.
In order to make this legislation a business reality, we:
- Hired tax credit professionals
- Formed strategic relationships with leading law and accounting firms
- Commissioned legal and accounting opinions
- Created legal documents necessary to monetize the Historic Tax Credits
- Developed a database of potential buyers to insure timely sale of the credits upon project completion.
We offer:
- Conventional construction loans
- Tax credit bridge loans
- Investor sale of the Tax Credit Certificates
- Introductions to investors of Federal Historic Tax Credits
For more information about our Historic Tax Credit program, contact our Commercial Real Estate department at (401) 456-5000.
Frequently Asked Questions
What is the Rhode Island Historic Tax Credit?
The Rhode Island Historic Tax Credit is a tax credit for persons who substantially rehabilitate certified historic buildings located in Rhode Island in accordance with certain prescribed standards. The credit applies to both commercial and residential income-producing buildings.
The amount of the credit is 30% of the "qualified rehabilitation expenses" (generally, the amount spent on rehabilitation that is eligible for depreciation for federal income tax purposes). Qualified rehabilitation expenses equal to at least half the "adjusted basis" of the structure must be incurred within a 24-month period.
How does the credit work?
The credit becomes available when the building rehabilitation is completed and certified by the Commission and the building is placed in service. The person who incurred the rehabilitation expenditures may use the credit, or it may be sold to a third party. The full amount of the credit is immediately usable against income tax payable under Rhode Island law, and any excess may be carried forward for up to 10 years.
How is the credit issued?
The tax credit takes the form of a Certificate, which is issued by the Commission. The Tax Credit Certificate is detachable from the underlying real estate, and may be issued in fractional shares to encourage purchase by individuals and other small taxpayers.
How do I use the credit?
The Tax Credit Certificate is attached to the taxpayer's state income tax return. The taxpayer will receive a credit for the face amount of the Certificate. The credit amount is not reduced even if the taxpayer purchased the Certificate at a discount.
Why should I buy Historic Tax Credits?
The benefits of purchasing Historic Tax Credits are more than monetary. Aside from receiving an immediate tax reduction, the buyer will also support the preservation of historic buildings within the State of Rhode Island.
Is this credit different from other historic and housing credits?
Yes. The State Historic Tax Credit was structured with a streamlined process for building owners. The credit was also intended to be sold to third parties to provide capital for historic rehabilitations. To facilitate sales, the statute allows the credit to be sold to third parties who have no ownership interest in the real estate.