AB 375

This bill modifies the historic rehabilitation tax credit, which allows taxpayers to claim a credit for the amounts spent to rehabilitate certified historic structures located in Wisconsin. The credit is based on the federal rehabilitation tax credit. In general, a taxpayer may claim both credits for the same rehabilitation project; however, in some cases, a taxpayer may not be able to claim both due to differences in state and federal law.

Under current law, taxpayers may claim a credit equal to 20 percent of their qualified rehabilitation expenditures so long as the expenditures are at least $50,000. Federal law further requires the expenditures exceed the greater of the taxpayer’s adjusted basis in the property (initial cost with certain adjustments) or $5,000. The bill provides that the federal requirement does not apply, while maintaining the $50,000 threshold.

Also under current law, a taxpayer must be certified by the Wisconsin Economic Development Corporation to claim the credit. As part of this requirement, the taxpayer must provide to WEDC evidence that the State Historic Preservation Officer approved the rehabilitation before the work began and that the SHPO recommended the rehabilitation for approval to the U.S. Secretary of the Interior. The bill removes the requirement regarding SHPO recommendation for federal approval if the taxpayer claims only the state credit.

The bill modifies the timing for claiming the credit, which is currently based on when the taxpayer claims the federal credit. Federal law, as amended by the Tax Cuts and Jobs Act of 2017, generally requires taxpayers claim the credit in equal amounts over five years. Under the bill, the full credit is generally claimed in one year.

The bill sunsets the credit for the rehabilitation of qualifying buildings that are not certified historic structures and the corresponding requirement that WEDC certify taxpayers to claim that credit. The Tax Cuts and Jobs Act had sunsetted a similar federal credit.

Finally, current law prohibits WEDC from certifying persons to claim more than a total of $3,500,000 in tax credits for all projects undertaken on the same parcel. Under the bill, this restriction only applies to certifying persons to claim tax credits for all projects undertaken on the same parcel within a single 10-year period.