Missouri Historic Rehabilitation Tax Credit

Missouri Historic Rehabilitation Tax Credit – In 1998, Missouri created a historic preservation tax credit.  The credit has been one of the most successful state historic tax credits in the United States because of its attractive features.  Missouri has consistently been a leader in historic rehabilitation projects since the state credit was implemented.  The Missouri historic tax credit provides for a credit equal to 25% of the qualified rehabilitation expenditures incurred.  The definition of qualified rehabilitation expenditures generally piggybacks the definitions contained in Internal Revenue Section 47, which contains the rules for federal historic tax credits. 

Missouri taxpayers find the historic tax credit very attractive.   They can immediately satisfy their Missouri tax liability at a discounted rate without subjecting themselves to the risk of recapture.  The Missouri historic tax credit is fully transferable.  The Missouri historic tax credit can be carried back to any of the three preceding years and carried forward for the succeeding ten tax years. In addition, Missouri historic tax credits are purchased and do not require the taxpayer to subject themselves to any of the risks associated with the underlying real estate project.

The 2009 legislative session concluded with the successful passage of an economic development bill.  The following modifications were made to the Missouri historic tax credit program:

1. A per project cap of $1,000,000 in QRE’s ($250,000 in Missouri historic tax credits) is included for owner occupied single family residences.
2. A Small Deal Exemption.  Projects with QRE’s of $1,100,000 ($275,000 in Missouri historic tax credits) or less are not subject to a cap.  Historical data shows that 75% of all Missouri historic rehabilitation projects fall into this category.
3. Beginning with all preliminary applications filed after January 1, 2010, there begins a $140 million annual cap on Missouri historic tax credits.