                                 CODE OF VIRGINIA

HISTORIC REHABILITATION TAX CREDIT (§ 58.1-339.2)

A. Effective for taxable years beginning on and after January 1, 1997, any
individual, trust or estate, or corporation incurring eligible expenses in the
rehabilitation of a certified historic structure shall be entitled to a credit
against the tax imposed by Articles 2 (&#xA7; 58.1-320 et seq.), 6 (&#xA7;
58.1-360 et seq.) and 10 (&#xA7; 58.1-400 et seq.) of Chapter 3; Chapter 12
(&#xA7; 58.1-1200 et seq.); Article 1 (&#xA7; 58.1-2500 et seq.) of Chapter 25;
and Article 2 (&#xA7; 58.1-2620 et seq.) of Chapter 26, in accordance with the
following schedule:
			If the amount of such credit exceeds the taxpayer&#8217;s tax liability for
such taxable year, the amount that exceeds the tax liability may be carried over
for credit against the taxes of such taxpayer in the next ten taxable years or
until the full credit is used, whichever occurs first. Credits granted to a
partnership or electing small business corporation (S corporation) shall be
passed through to the partners or shareholders, respectively. Credits granted to
a partnership or electing small business corporation (S corporation) shall be
allocated among all partners or shareholders, respectively, either in proportion
to their ownership interest in such entity or as the partners or shareholders
mutually agree as provided in an executed document, the form of which shall be
prescribed by the Director of the Department of Historic Resources.

B. Effective for taxable years beginning on and after January 1, 2000, any
individual, trust, estate, or corporation resident in Virginia that incurs
eligible expenses in the rehabilitation of a certified historic structure in any
other state that has in effect a reciprocal historic structure rehabilitation
tax credit program and agreement for residents of that state who rehabilitate
historic structures in Virginia shall be entitled to a credit to the same extent
as provided in subsection A and other applicable provisions of law; however, no
eligible party shall receive any credit authorized under this subsection prior
to taxable years beginning on and after January 1, 2002.

C. 1. To claim the credit authorized under this section, the taxpayer shall
apply to the Virginia Department of Historic Resources, which shall determine
the amount of eligible rehabilitation expenses and issue a certificate thereof
to the taxpayer. The taxpayer shall attach the certificate to the Virginia tax
return on which the credit is claimed.

   2. a. For taxable years beginning on and after January 1, 2017, but before
   January 1, 2025, the amount of the credit that may be claimed by each
   taxpayer, including amounts carried over from prior taxable years, shall not
   exceed $5 million in any taxable year.
   				b. For taxable years beginning on and after January 1, 2025, the amount of
   the credit that may be claimed by each taxpayer, including amounts carried
   over from prior taxable years, shall not exceed $7.5 million in any taxable
   year.

D. When used in this section:
			&#8220;Certified historic structure&#8221; means a property listed
individually on the Virginia Landmarks Register, or certified by the Director of
the Virginia Department of Historic Resources as contributing to the historic
significance of a historic district that is listed on the Virginia Landmarks
Register or certified by the Director of the Virginia Department of Historic
Resources as meeting the criteria for listing on the Virginia Landmarks
Register.
			&#8220;Eligible rehabilitation expenses&#8221; means expenses incurred in the
material rehabilitation of a certified historic structure and added to the
property&#8217;s capital account.
			&#8220;Material rehabilitation&#8221; means improvements or reconstruction
consistent with &#8220;The Secretary of the Interior&#8217;s Standards for
Rehabilitation,&#8221; the cost of which amounts to at least fifty percent of
the assessed value of such building for local real estate tax purposes for the
year prior to the initial expenditure of any rehabilitation expenses, unless the
building is an owner-occupied building, in which case the cost shall amount to
at least twenty-five percent of the assessed value of such building for local
real estate tax purposes for the year prior to the initial expenditure of any
rehabilitation expenses.
			&#8220;Owner-occupied building&#8221; means any building that is used as a
personal residence by the owner.

E. The Director of the Department of Historic Resources shall establish by
regulation the requirements needed for this program, including the fees to
defray necessary expenses thereof, and, except as otherwise prohibited by this
section, the extent to which the availability of the credit provided by this
section is coextensive with the availability of the federal tax credit for the
rehabilitation of certified historic resources.

F. Any gain or income under federal law from the allocation or application of a
tax credit under this section shall not be (i) taxable gain or income for
purposes of the tax imposed pursuant to Article 2 (&#xA7; 58.1-320 et seq.),
(ii) taxable gain or income for purposes of the tax imposed pursuant to Article
6 (&#xA7; 58.1-360 et seq.), or (iii) taxable gain or income for purposes of the
tax imposed pursuant to Article 10 (&#xA7; 58.1-400 et seq.). However, nothing
in this subsection shall be construed or interpreted as allowing a subtraction
or deduction for such gain or income under federal law if the gain or income is
otherwise excluded, deducted, or subtracted in computing the respective tax set
forth under clauses (i) through (iii).

HISTORY: 1996, c. 520; 1998, cc. 371, 372; 1999, cc. 152, 183, 213; 2000, cc.
356, 367, 429; 2012, cc. 92, 639; 2017, cc. 717, 721; 2019, c. 25; 2024, cc.
462, 512.