SF 1659

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; providing an income tax credit
for expenditures for historic structure
rehabilitation; proposing coding for new law in
Minnesota Statutes, chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290.0676] CREDIT FOR HISTORIC STRUCTURE
REHABILITATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section,
the terms defined in this subdivision have the meanings given.
new text end

new text begin (b) "Certified historic structure" means a property located
in Minnesota and listed individually on the National Register of
Historic Places or a historic property designated by either a
certified local government or a heritage preservation commission
created under the National Historic Preservation Act of 1966 and
whose designation is approved by the state historic preservation
officer.
new text end

new text begin (c) "Eligible property" means a certified historic
structure or a structure in a certified historic district that
is offered or used for residential or business purposes.
new text end

new text begin (d) "Structure in a certified historic district" means a
structure located in Minnesota that is certified by the State
Historic Preservation Office as contributing to the historic
significance of a certified historic district listed on the
National Register of Historic Places or a local district that
has been certified by the United States Department of the
Interior.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer who incurs costs for
the rehabilitation of eligible property may take a credit
against the tax imposed under this chapter in an amount equal to
25 percent of the total costs of rehabilitation. Costs of
rehabilitation include, but are not limited to, qualified
rehabilitation expenditures as defined under section 47(c)(2)(A)
of the Internal Revenue Code, provided that the costs of
rehabilitation must exceed 50 percent of the total basis in the
property at the time the rehabilitation activity begins and the
rehabilitation must meet standards consistent with the standards
of the Secretary of the Interior for rehabilitation as
determined by the State Historic Preservation Office of the
Minnesota Historical Society.
new text end

new text begin Subd. 3. new text end

new text begin Carryback and carryforward. new text end

new text begin If the amount of
the credit under subdivision 2 exceeds the tax liability under
this chapter for the year in which the cost is incurred, the
amount that exceeds the tax liability may be carried back to any
of the three preceding taxable years or carried forward to each
of the ten taxable years succeeding the taxable year in which
the expense was incurred. The entire amount of the credit must
be carried to the earliest taxable year to which the amount may
be carried. The unused portion of the credit must be carried to
the following taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners; transfers. new text end

new text begin (a)
Credits granted to a partnership, a limited liability company
taxed as a partnership, or multiple owners of property shall be
passed through to the partners, members, or owners,
respectively, pro rata or pursuant to an executed agreement
among the partners, members, or owners documenting an alternate
distribution method.
new text end

new text begin (b) Taxpayers eligible for credits may transfer, sell, or
assign the credits in whole or part. Any assignee may use
acquired credits to offset up to 100 percent of the taxes
otherwise imposed by this chapter. The assignee shall perfect
such transfer by notifying the Department of Revenue in writing
within 30 calendar days following the effective date of the
transfer in such form and manner as shall be prescribed by the
Department of Revenue. The proceeds of any sale or assignment
of a credit shall be exempt from taxation under this chapter.
new text end

new text begin Subd. 5. new text end

new text begin Process. new text end

new text begin To claim the credit, the taxpayer must
apply to the State Historic Preservation Office of the Minnesota
Historical Society before a historic rehabilitation project
begins. The State Historic Preservation Office shall determine
the amount of eligible rehabilitation costs and whether the
rehabilitation meets the standards of the United States
Department of the Interior. The State Historic Preservation
Office shall issue certificates verifying eligibility for and
the amount of credit. The taxpayer shall attach the certificate
to any income tax return on which the credit is claimed. The
State Historic Preservation Office of the Minnesota Historical
Society may collect fees for applications for the historic
preservation tax credit. Fees shall be set at an amount that
does not exceed the costs of administering the tax credit
program.
new text end

new text begin Subd. 6. new text end

new text begin Mortgage certificates; credit for lending
institutions. new text end

new text begin (a) The taxpayer may elect, in lieu of the credit
otherwise allowed under this section, to receive a historic
rehabilitation mortgage credit certificate.
new text end

new text begin (b) For purposes of this subdivision, a historic
rehabilitation mortgage credit is a certificate that is issued
to the taxpayer according to procedures prescribed by the State
Historic Preservation Office with respect to the certified
rehabilitation and which meets the requirements of this
paragraph. The face amount of the certificate must be equal to
the credit that would be allowable under subdivision 2 to the
taxpayer with respect to the rehabilitation. The certificate
may only be transferred by the taxpayer to a lending
institution, including a nondepository home mortgage lending
institution, in connection with a loan:
new text end

new text begin (1) that is secured by the building with respect to which
the credit is issued; and
new text end

new text begin (2) the proceeds of which may not be used for any purpose
other than the acquisition or rehabilitation of the building.
new text end

new text begin (c) In exchange for the certificate, the lending
institution must provide to the taxpayer an amount equal to the
face amount of the certificate discounted by the amount by which
the federal income tax liability of the lending institution is
increased due to its use of the certificate in the manner
provided in this section. That amount must be applied, as
directed by the taxpayer, in whole or in part, to reduce:
new text end

new text begin (1) the principal amount of the loan;
new text end

new text begin (2) the rate of interest on the loan; or
new text end

new text begin (3) the taxpayer's cost of purchasing the building, but
only in the case of a qualified historic home that is located in
a poverty-impacted area as designated by the State Historic
Preservation Office.
new text end

new text begin The lending institution may take as a credit against the
tax due under this chapter an amount equal to the amount
specified in the certificate. If the amount of the discount
retained by the lender exceeds the amount by which the lending
institution's federal income tax liability is increased due to
the use of a mortgage credit certificate, the excess shall be
refunded to the borrower with interest at the rate prescribed by
the State Historic Preservation Office. The lending institution
may carry forward all unused credits under this subdivision
until exhausted. Nothing in this subdivision requires a lending
institution to accept a historic rehabilitation certificate from
any person.
new text end

Sec. 2. new text begin DETERMINATION OF ECONOMIC IMPACT.
new text end

new text begin The Minnesota Historical Society shall annually determine
the economic impact to the state from the rehabilitation of
eligible property for which credits are provided under section 1
and report on the impact to the committees on taxes of the
senate and house of representatives.
new text end

Sec. 3. new text begin EFFECTIVE DATE.
new text end

new text begin Section 1 is effective for taxable years beginning after
December 31, 2004.
new text end