[MassHistPres] Historic preservation tax credits

[slater at alum.rpi.edu]

I received a number of off-list replies; thank you to the people who
sent them, I may follow up with more questions at a later time.

My motivation in asking about these credits is that, like others, I've
certainly heard of them, and I've seen projects that take advantage of
them, but I wanted to know how feasible they are for the average
investor.

For example, there are a number of investment residential properties in
Springfield that are sitting unoccupied and in need of serious rehab. I
would like to be able to steer a property owner towards the tax credits
as a way of saying "here's the incentive for you to fix up your historic
property".

The fact that there are courses, consultants, and even a trading market
for these credits scares me, and tells me that this program is not
geared towards the average guy, it is geared towards large investors.

I was hoping that someone who owns a property at, say, a $50-100k
purchase price could take advantage of these credits to make $50-75k
worth of renovations to the property, leaving them with around $10k in
tax credits which they could then use to offset the profit from the
rents they charge.

Given the complexity, it seems that the range has to be in the "many
hundreds of thousands of dollars" in order to make it worthwhile.
Although $10k in tax savings isn't really that much, it could be
attractive to a small investor by saying "you won't have to pay taxes on
your profits for several years". Psychologically, "no taxes" makes
people behave differently (see the "tax holiday" as an example).

Does anyone know of success stories involving tax credits for small
projects? In people's educated opinions, is this worth pursuing for the
purposes I'm looking for, or is this really only practical for large
projects?

Ralph Slate
Springfield Historical Commission