The 10% (residential) tax credit…no, really! Pt I

Every good preservationist knows that rehab tax credits get subdivided into two neat categories: the 20% credit for the rehab of National Register-listed buildings, and the 10% credit for the rehab of non-NR properties constructed before 1936. Every good preservationist also knows that the 10% credit can only go toward buildings with non-residential uses (it says so in the Historic Preservation Tax Incentives brochure that you can check out here).

As someone who likes to consider myself somewhat well-versed in the rehab tax credits, you can imagine my surprise when my Historic Real Estate Finance instructor asserted that, in fact, you could use the 10% credit for a project that included a residential component. I remember thinking at the time that that was a good piece of tax credit info to know, and I filed it away in my mind.
Fast forward to yesterday, and Joyce and I were having a conversation with a developer who is redeveloping a non-NR building, constructed before 1936, for mixed use.
So, I bring up the 10% tax credit. The developer would use the 10%, but the building development will have a residential component…and then I pounce.
Well yes, but, did you know you *can* use the 10% on a mixed use project with residential?
However, after piquing the developer’s interest, I realize I can’t exactly defend my position with official IRS definitions, or publication references proving my point. So, I tasked myself with a mini-IRS immersion to first and foremost conclusively prove (at least to myself) that I’m providing useful information a building developer will actually be able to use.
I’ll share my search for definitive answers (and the results) in Part II.