News & Events

New legal changes benefit developers and investors

• 20 Percent Tax Credit Allowed.  Structures located in Minnesota which earn the 20 percent federal Historic Tax Credit will now be eligible for a Minnesota state tax credit equal to the same amount as the federal Historic Tax Credit allowed for such structure. There is no MHTC for “10 percent” federal historic tax credit projects.
• Various Ways to Use the MHTC. The MHTC can be put to use in a variety of ways, which allows developers and investors maximum flexibility in deal structure:
  • Certificated and Transferable. The MHTC is certificated, and the certificate can be transferred.
  • Allocations to Partners. Alternatively, MHTCs awarded to a partnership may be allocated among the partners in any manner, provided the allocation may not be changed after the end of the year in which the MHTCs are earned.
  • Refundable. The MHTC is also refundable against income taxes and franchise taxes, but not refundable against premium taxes.
  • Cash Grant Option. There is also a “cash grant” option. The developer can elect to take $.90 in a cash grant instead of $1.00 in credit. This election must be made on the INITIAL application, and we anticipate this election will be irrevocable. The cash grant will be federal and state taxable income in most foreseeable circumstances.
  • Credit Against Income, Franchise or Premium Tax. The MHTC can be taken against Minnesota income taxes (Minnesota’s “individuals income tax”), franchise taxes (Minnesota’s “corporate income tax”) and premium taxes (imposed on insurances companies).
• No Recapture. There is no recapture of the MHTC.
• Application Process. An initial application for an “allocation” of MHTC must be submitted BEFORE the rehabilitation begins or the project will not qualify. Applications will be submitted to the Preservation Office of the Minnesota Historical Society. We expect to see forms and further program guidance from the Preservation Office in the near future. Allocations will expire if the project is not placed in service within three years.
• Only New Projects Are Eligible. Projects are eligible only if the expenditures are pursuant to a construction contract entered into after May 1, 2010.
• No Cap on Available Credits. There is no cap on the amount of MHTC per project and no statewide cap.
• Not a Permanent Credit.  The MHTC program will be limited to the amount of MHTCs allocated through June 30, 2015.