Resources & Guides

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Rehabilitation Tax Credit:

• "Rehabilitation" is work done to a historic property that meets the Secretary of the Interior's Standards for Rehabilitation. The Standards prioritize repair and preservation of histo​​​​ric character, with compatible alterations to allow for contemporary use. The expenses that qualify for this program are known as "Qualifying Rehabilitation Expenses" or "QREs." A percentage of your QREs (20% or 30% for State Credits, and/or 20% for Federal Credits) may be awarded to the property owner after the work is complete, in the form of a Tax Credit. The review of a rehabilitation project is completed by the Kentucky Heritage Council (KHC) and National Park Service (NPS), for the State and Federal Tax Credit programs, respectively. These agencies do not provide tax-related advice. 
  
  
• "Tax Credits" are dollar-for-dollar credits toward the income taxes the  property owner owes, reducing the amount of money a taxpayer must pay in income taxes for​ the given year. This is not a tax deduction, which reduces your income subject to being taxed. This program is a type of investment credit, which can be awarded once the completed work has been certified as meeting the Standards for Rehabilitation. The issuance of the final awarded tax credits is overseen by the Kentucky Department of Revenue and IRS for State and Federal Tax Credit programs, respectively. These agencies do not provide rehabilitation-related advice.  ​
  

This program is a voluntary incentive that follows regulatory processes that are guided by codified standards of review and required submittals. All application forms are located on our Application & Forms page.​ 

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Step 1: Confirm Eligibility

​Properties must be listed on the National Register of Historic Places (NRHP), individually or as Contributors to a Historic District. Search for your property on our Preliminary Site Check Map to see its NRHP status. 

• State Part 1 Applications are always required. ​
• Singular buildings that are individually listed on the NRHP do not need to provide a Federal Part 1 Application. In all other instances, a Federal Part 1 Application is required. 
• Properties located within a Historic District must provide a District Map with the property's location within the District indicated. 
• Properties with multiple buildings must provide a Site Plan, showing the location of each building.  

Questions about NRHP listing and/or District maps? Email Marty.Perry@ky.gov to get information on your property and/or the NRHP Historic District it's located within. 

In addition to being listed, the property must have enough integrity to convey its historic significance. The determination of eligibility is completed with a Part 1 Application. There are no State or Federal Review Fees for Part 1 applications. Part 1 Applications must be accompanied by Photos and Photo-Key Plan(s). 

Questions about photographing a property? See our "How to Photo-Document a Property" video tutorial, located at the bottom of this page. 

Step 2: Define a Proposed Project

The Part 2 application is the project's Description of Rehabilitation​ and should be submitted once a project scope can be described in the application, but before you begin any of the work.​ Beginning work before a Part 2 approval is never recommended and done at the applicant's own risk. The Part 2 outlines proposed rehabilitation work, estimated costs, and may require supplemental materials and drawings for complex projects. 

Staff are attempting to visualize the changes that will take place and assess if those changes are aligned with the Standards for Rehabilitation. We do not review the Rehabilitation Plan for code compliancy; rather, we are looking for the historic character of the property to be preserved. With this in mind, try to describe the existing condition, the need/desire for the change, and what the intended change will look like. Try to avoid conflicting or ambiguous language that could be interpreted incorrectly (such as: if possible, repair or replace, where needed, etc.). These descriptions do not give the reviewers an accurate or clear picture of the actual proposal and will likely require revisions.  

State Part 2 applications shall not be reviewed (and as such, shall not receive an Allocation Letter) until payment is received. State Review Fees are calculated by the Payment Portal and are based on your Qualified Rehabilitation Expenses. ​

Once an application is submitted to our website's Application Portal (located on the main Tax Credit website), you'll receive a "Confirmation and Assignment" email of your materials' transmittal within 2 business days. KHC's review is typically complete within 30 days from the submittal of a complete application and we review applications in the order in which they are received. For projects that also have a Federal application, there is an additional 30 day review period for the NPS to conduct their review. ​

Any work done prior to submitting and receiving an approval of the Part 2 Application is done at the applicant's own risk and may result in disqualification of the project. 

Project Review Timeline:

• All applications must be submitted electronically to our website's Application Portal (unless a Title IV accommodation has been requested). 
  
• KHC reviews State and Federal Tax Credit applications all year long!
  
• Parts 1 and 2 are typically submitted together, although it is not a requirement. ​These applications are submitted before rehabilitation begins. Approved Part 2 applications will be allocated funding based on the date of a complete Part 2 application submittal.  
  
• Part 3 Applications are submitted after the rehabilitation work has been completed. 
  

Allocations:

• State projects are subject to the state's Tax Credit cap.
  
• State projects with approved Part 1 and 2 Applications are allocated funding. In other words: KHC reserves a set dollar amount in Tax Credit for the project, which may be awarded once the work is complete and certified through a​ Part 3 Application. The maximum Tax Credit amount allocated to a project is provided to the applicant electronically in an Allocation Letter.   Allocation amounts are subject to apportionment, if there are more projects approved than funding allows.
  
  
• Federal projects do not receive Allocation Letters because the Federal program does not have a credit cap or budget.  ​

Tax Credit Programs: 

There is a State and a Federal Rehabilitation Tax Credit.
KHC accepts and reviews both State and Federal Tax Credit applications. The property's Proposed Use determines which Tax Credit program (State and/or Federal) that you ma​y be eligible for, and the subsequent "Qualifying Rehabilitation Expenses" (QRE) requirement.   If you have questions about calculating the Adjusted Basis for Federal Tax Credit applications, please reference the IRS's resources here and here.

The State Tax Credit program is undergoing updates, so please check back in July for more information!

"Qualifying Rehabilitation Expenses" (QREs): 

Although all scopes of work are under review for a Rehabilitation​ Tax Credit project, not all of the project's expenses may qualify as QREs for a Tax Credit award. Generally, QREs are expenses that are directly tied to the rehabilitation of the historic property's structural elements. QRE are not the cost of acquisition / purchase price; site work; new construction and/or enlargements of existing structures; or the purchase of personal property (such as appliances, furniture, artwork, etc). Per KRS ​171.397(2)(b), the Kentucky Heritage Council shall make the determination of what expenses are considered QREs. While there is no definitive list of QREs vs. Non-QREs, the IRS has a guiding document​ available, here:
 ​IRS's QRE Brief.pdf

Step 3: Amend & Complete the Project

If scopes of work change from what was initially submitted in the Part 2 Application, please submit an Amendment application, describing the proposed changes. It is the applicant's responsibility to submit documentation that updates the Description of Rehabilitation, and failure to do so is at their own risk. There are no review fees for an Amendment submittal. 

Once the project is complete, the Part 3 application is submitted with "After Rehabilitation" photos, taken from the same vantage point as the "Before" photos previously submitted with the Part 1 & 2. 

State Part 3 applications shall not be reviewed until payment is received. State Review Fees are calculated by the Payment Portal and are based on your Qualified Rehabilitation Expenses. ​

Once an application is submitted to our website's Application Portal (located on the main Tax Credit website), you'll receive a "Confirmation and Assignment" email of your materials' transmittal within 2 business days. KHC's review is typically complete within 30 days from the submittal of a complete application and we review applications in the order in which they are received. For projects that also have a Federal application, there is an additional 30 day review period for the NPS to conduct their review. ​

For questions regarding the State tax-filing process for Approved State Part 3 Applications, you should refer to the Department of Revenue's Tax Credit website and/or contact​ the Department of Revenue: D​ORTaxCredits@ky.gov. 

For questions regarding the Federal tax-filing process for Approved Federal Part 3 Applications, you should refer to the IRS's website and/or contact the IRS at: Maria.Blake@irs.gov