NC State Mill Rehabilitation Tax Credits

The creation of the North Carolina Mill Rehabilitation Tax Credits, prompted by the closure of many textile, tobacco and furniture plants during the past decade, is considered a major economic development initiative that will enhance the economic feasibility of reusing many of the state's former industrial sites. State tax credits are available for the rehabilitation of income- and nonincome-producing historic mill properties. The mill rehabilitation tax credit measures provide:

In development tier* one or two counties, a 40% state tax credit for the “certified rehabilitation” of income-producing historic structures that also qualify for the 20% federal investment tax credit. In effect, the combined federal-state credits reduce the cost of a certified rehabilitation of an income-producing historic structure by 60%.

In development tier* three counties, a 30% state tax credit for the “certified rehabilitation” of income-producing historic structures that also qualify for the 20% federal investment tax credit. In effect, the combined federal-state credits reduce the cost of a certified rehabilitation of an income-producing historic structure by 50%.

In development tier* one or two counties, a 40% state tax credit for the “certified rehabilitation” of nonincome-producing historic structures. There is no equivalent federal credit for such rehabilitations.

In development tier* three counties, a state mill tax credit for the rehabilitation of nonincome-producing historic structures is not available. However the 30% state historic rehabilitation tax credit is still available.

The state mill rehabilitation tax credit is available in lieu of (as opposed to in addition to) the state historic rehabilitation tax credit.

*http://www.nccommerce.com/en/BusinessServices/SupportYourBusiness/Incentives/CountyTierDesignations2011.htm

The certification obtained from the State Historic Preservation Officer that the applicable facility comprises an eligible site. An eligible site is a site located in this State that satisfies all of the following conditions.

It was used as a manufacturing facility or for purposes ancillary to manufacturing, as a warehouse for selling agricultural products, or as a public or private utility.

It is a certified historic structure or a State-certified historic structure.

It has been at least eighty percent (80%) vacant for a period of at least two years immediately preceding the date the Eligibility Certification is made.

The certification obtained by the State Historic Preservation Officer from the taxpayer of the amount of qualified rehabilitation expenditures or the rehabilitation expenses incurred with respect to a certified rehabilitation of an eligible site.

For income-producing projects, a taxpayer who is allowed a credit under section 47 of the Code for making qualified rehabilitation expenditures of at least three million dollars ($3,000,000) with respect to a certified rehabilitation of an eligible site located in a development tier one, two or three area is allowed a credit equal to a percentage of the expenditures that qualify for the federal credit.

For non-income producing projects, a taxpayer who is not allowed a federal credit under section 47 of the Code and who makes rehabilitation expenses of at least three million dollars ($3,000,000) with respect to a certified rehabilitation of an eligible site located in a development tier one or two area is allowed a credit equal to a percentage of the rehabilitation expenses.

This information describes the State Mill Rehabilitation tax credit program in very general terms only. Taxpayers should consult a professional tax advisor, the North Carolina Department of Revenue, or the Internal Revenue Service for help in determining the tax and other financial implications of any matter discussed here.

The rules and fee schedule are the same for all State Rehabilitation Tax Credit Programs.

For application materials contact:
Jennifer Johnson
Program Assistant
Jennifer.Johnson@ncdcr.gov
919-807-6590

For further information contact:
Tim Simmons, Senior Preservation Architect
Income-Producing Tax Credit Coordinator
Tim.Simmons@ncdcr.gov
919-807-6585