Notes on the 20% tax credit: when your project starts matters

As you know (especially if you took an active role in our recent advocacy push) the preservation community managed to save the 20% rehab tax credit when sweeping tax reform was passed last month. But what does that mean for rehab projects going forward? As we transition to a credit that pays out 4% of the credit per year for 5 years (once the building is placed in service), however, the bigger question may be, when do rules for the new credit go into effect?
If you’re planning to start a project, and were hoping to take advantage of the prior credit provisions, here are two important points to keep in mind: 1) you needed to be the building owner by December 31, 2017, and 2) you need to begin work (incurring expenses on the project) no later than 180 days after the legislation went into effect (prior to the end of June).
Of course, buying or leasing a property now automatically puts you into the new 20% tax credit rules, but if you were looking to start turning dirt on a project from 2017 or before, be aware that the clock is ticking.