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Illinois Historic Preservation Tax Credit Program

The Illinois Historic Preservation Tax Credit Program provides a state income-tax credit equal to 25% of a project’s qualified expenditures to owners of certified historic structures located within River Edge Redevelopment Zones (Aurora, East St. Louis, Elgin, Peoria & Rockford) who undertake certified rehabilitations during the taxable year.  Substantial rehabilitation investments will create jobs in Illinois, stimulate the economies of River Edge communities, and revitalize historic structures and neighborhoods. Awarded tax credits may not be sold or otherwise transferred to another person or entity.  The credit cannot be carried forward.

***The Illinois Historic Preservation Tax Credit Program runs from January 1, 2012 to January 1, 2022.

The program is operated by the Illinois Department of Commerce and Economic Opportunity, in consultation with the Illinois State Historic Preservation Office (IL SHPO) in the Department of Natural Resources. The Department of Commerce determines the amount of eligible rehabilitation costs and expenses, and IL SHPO and the National Park Service (NPS) determine whether the rehabilitation is consistent with the Secretary of the Interior's Standards for Rehabilitation (Standards). All work on the project (interior and exterior) must meet the Standards. Upon review of the completed project and its Certification by the NPS, the Department of Commerce will issue a Certificate to the owner in the amount of eligible tax credits.  Any taxpayer liable for income tax can use the Historic Preservation Tax Credit Program. This includes individuals, regular corporations, estates and trusts. Pass-through entities, such as partnerships, limited liability companies treated as partnerships for tax purposes or S-corporations, cannot use the tax credit. Members, partners and shareholders of these pass-through entities can use the credit.

Projects must meet the following five requirements:

  1. The structure must be located within a River Edge Redevelopment Zone (designated portions of Aurora, East St. Louis, Elgin, Peoria and Rockford). To determine whether your property is within one of these River Edge Redevelopment Zones, contact the city’s Zone administrator, whose contact information is listed on the Department of Commerce website.
  2. The structure must be certified as historic, which means that it must meet one of these three criteria:

    a.  listed individually on the National Register of Historic Places, or
    b.  a contributing building within a National Register historic district, or
    c.  a contributing building within a local historic district that has been certified by the National Park Service for the purposes of taking the federal tax credit.

To determine whether a property is a certified historic structure, contact Andrew Heckenkamp, IL SHPO’s National Register Coordinator, at 217-785-4324 or email andrew.heckenkamp@illinois.gov.

  1. Qualified expenditures must equal or exceed $5,000 and must exceed 50% of the purchase price of the property when it last sold. If the owner is also applying for the 20% Federal Historic Rehabilitation Tax Credit, that program’s minimum expenditure is $5,000 or the building’s adjusted basis, whichever is greater.
  2. The structure must be used for income-producing purposes, such as rental-residential, commercial, agricultural, and/or industrial.
  3. The qualified taxpayer / historic-structure owner must be in good standing with the Illinois Department of Revenue.

Application Process and Forms
The 25% state tax credit is designed to be used in conjunction with the 20% Federal Historic Rehabilitation Tax Credit.  The three short forms of the state application (PARTS A, B and C) coordinate with the three parts of the federal application (PARTS 1, 2 and 3).  The majority of applicants will be applying for both the state and federal credit programs; therefore, the state form has been designed to complement and not duplicate the federal one.  To access program applications (Parts A, B, C, 1, 2 & 3), please click the application links listed below.

Click here to see the NPS’s webpage on the 20% federal credit and to access its application. Click here to see IL SHPO's webpage on the federal credit.  It is highly recommended that prior to construction, applicants discuss their projects with the Department of Commerce at 312-814-9407 or email CEO.HistoricCredit@illinois.gov, and with IL SHPO at 217-524-0276 or email HPA.Incentives@illinois.gov.

Two copies of the three parts of each application and all accompanying material must be mailed to IL SHPO at:

Illinois State Historic Preservation Office
Attn: Illinois Historic Preservation Tax Credit Program
Illinois Department of Natural Resources
1 Natural Resources Way
Springfield, IL 62702

The basic application sequence is as follows:

  1. The applicant mails two hardcopies of the following two forms and their accompanying information to IL SHPO. They must be approved prior to the completion of the project:

Click here to access PART A, State Tax Credit Application
“Certification of River Edge Location”
PART A certifies that the property is within a designated River Edge Redevelopment Zone. The applicant must obtain the signature of the respective River Edge Zone administrator. Applicant must mail two copies each of:

  • the signed PART A form
  • map of the River Edge Zone with the building highlighted

Click here to access PART 1, Federal Tax Credit Application

“Evaluation of Significance”

PART 1 certifies that the building is historic for the purposes of the 20% federal tax credit. Applicant must mail two copies each of:

  • the signed PART 1 form
  • labeled set of representative photographs of the exterior of the building
  1. Preferably before construction commences, the applicant mails two hardcopies of these two forms and their accompanying information to IL SHPO:

Click here to access PART B, State Tax Credit Application

“Rehabilitation Stage"

PART B verifies the contact information of the owner and applicant. Applicant must mail two copies of:

  • the signed PART B form

Click here to access PART 2, Federal Tax Credit Application

“Description of Rehabilitation”

PART 2 describes the scope of work for the entire project. Applicant must mail two copies each of:

  • the signed PART 2 form
  • labeled set of photographs
  • sets of current drawings (if they exist)

It is highly recommended that applicants coordinate with IL SHPO early in the design process to ensure that the project will meet the Secretary of the Interior's Standards for Rehabilitation. Any work done prior to approval of the PART 2 will be at the owner’s own risk and could disqualify the project for both the state and federal credits. The National Park Services will charge applicants a fee before it will review the PART 2; there is no charge at this stage for the PART B (state credit).

  1. When construction is complete, the applicant mails two copies of the following form and its accompanying information to the IL SHPO:

Click here to access PART 3, Federal Tax Credit Application

“Request for Certification of Completed Work”

PART 3 certifies that the work has been done as it was described in the PART 2. Applicant must mail two copies each of:

  • the signed PART 3 form
  • labeled photographs

The National Park Service will charge a balance of the review fee, based upon the final project costs fee before it reviews the PART 3.

 

When the applicant receives the NPS’s letter approving the federal tax credit, the applicant mails two copies of the following form to IL SHPO:

  • Click here to access PART C, State Tax Credit Application
  • Click here to download a guide and important information regarding Part C Completion
  • Click here to download a sample financial spreadsheet to submit with your Part C documents

"Certification of Qualified Expenditures”

PART C certifies and lists the project’s qualified expenditures. Applicant must mail two copies each of:

  • the signed PART C form
  • a summary of expenses
  • copies of proof of payment (i.e., invoices, receipts, etc.).

When the state tax credit certificate is issued, a fee of up to 2% of the value of the issued state tax credits will be collected from the applicant. The Department of Commerce will explain the fee process and the amount owed when the tax-credit certificate is issued.

  1. Applicants must submit one completed ITR-1 form (“Request for Tax Clearance”) to the Illinois Department of Revenue by fax at 217-785-2643 or by mail at the following address:

Illinois Department of Revenue
Problems Resolution, (3-515)
PO Box 19014
Springfield, IL 62794-9014

Important Program and Agency Links:

For specific program language in the law that establishes this program (Illinois Income Tax Act ILCS 5/221) click here.

Click here for definitions for “Qualified Expenditures, Qualified Historic Structure & Qualified Taxpayer

Click here for National Park Service’s webpage on 20% credit and access to federal applications

Illinois State Historic Preservation Office

Illinois Department of Commerce and Economic Opportunity

River Edge Redevelopment Zones

 

DCEO Contact:

Ben Denney
217-524-4144
Ben.Denney@illinois.gov

For questions about architectural work, the Secretary of the Interior's Standards for Rehabilitation, or the Federal Historic Preservation Tax Credit process, please contact IL SHPO.

IL SHPO Contact:

Carol Dyson
217-524-0276
HPA.Incentives@illinois.gov