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Stacey Pfingsten

Tracking the 10%:  
The Ten Percent Rehabilitation Tax Credit for Non-Historic Buildings as a Tool for Historic Preservation

        In 1976, Congress established The Tax Reform Act to offer incentives to stimulate capital investment in our Nation’s historic structures. As a result of Urban Renewal, our cities were in rapid decline, and the tax incentives were used to spark interest in preserving historic buildings. Prior to their enactment, tax incentives actually benefited the demolition of structures. By utilizing the rehabilitation tax credits, once defunct buildings again became important economic anchors in their respective communities.

        The federal tax incentive program, as of 1986, has provided a twenty percent tax credit for the rehabilitation of historic properties and a ten percent tax credit for non-historic properties. Applying to only certified-historic-structures, the twenty percent credit has to comply with the 50-year rule and the rehabilitation must meet the Secretary of Interior’s Standards. The ten percent rehabilitation tax credit pertains to non-historic, non-residential, commercial buildings, built before 1936 and has a wall-retention and structural framework requirement. The taxpayer files form 3468 with the Internal Revenue Service to receive the ten percent credit.

        Whether it is due to loss of historic fabric from insensitive remodeling or lack of architectural grandeur, some buildings are not of landmark quality.  The average structure can receive the ten percent credit for rehabilitation, whether it is a container of affordable-housing, a barn in the rural countryside, or a storefront on Main Street. Since the IRS solely oversees the ten percent, little is known about the credit and the developments employed by the incentive. By collecting case studies from across the nation of ten percent projects, this thesis will evaluate the information and look to answer the following questions:

•  Can the ten percent credit be put to more effective use?

•  How can the ten percent credit gain more exposure?

•  Is the ten percent credit hindering the preservation movement?

        Twice since May of 2003, Congress has taken steps to try and repeal the ten percent rehabilitation credit. Stating reasons such as simplification of the rehabilitation credit by only having the twenty percent for historic structures and easing the burden of record keeping for taxpayers and administration. The ten percent credit, on average, costs Congress $30 million dollars per year. That is a small sum compared to the amount of revenue flow that the ten percent may provide back into local and state municipalities.



           Stacey Pfingsten received her BA in Graphic Design with a minor in Business Administration from Eastern Illinois University. Before entering SAIC for graduate study, she worked for six years in advertising and design in Chicago. This past summer Stacey was an intern for Preservation Action in Washington, D.C.


Thesis Advisor: Susan West Montgomery,  President, Preservation Action

Thesis Reader: Richard F. Friedman, Adjunct Professor, Historic Preservation; Partner, Neal, Murdock & Leroy, LLC, Chicago

Second Reader: Bradford J. White, Vice President, LR Development Company LLC; Chair, Preservation Action






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