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1999 SESSION

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VIRGINIA ACTS OF ASSEMBLY -- CHAPTER An Act to amend and reenact § 58.1-339.2 of the Code of Virginia, relating to the historic rehabilitation tax credit. [H 1739] Approved

Be it enacted by the General Assembly of Virginia:

1. That § 58.1-339.2 of the Code of Virginia is amended and reenacted as follows:

§ 58.1-339.2. Historic rehabilitation tax credit.

A. Effective for taxable years beginning on and after January 1, 1997, any individual, trust or estate, or corporation incurring eligible expenses in the rehabilitation of a certified historic structure shall be entitled to a credit against the tax imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.) and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; and Article 2 (§ 58.1-2620 et seq.) of Chapter 26 of this title, in accordance with the following schedule:

                    Year           % of Eligible Expenses

                    1997                     10%

                    1998                     15%

                    1999                     20%

                    2000 and thereafter      25%

If the amount of such credit exceeds the taxpayer's tax liability for such taxable year, the amount that exceeds the tax liability may be carried over for credit against the taxes of such taxpayer in the next five taxable years or until the full credit is used, whichever occurs first. Credits granted to a partnership or electing small business corporation (S corporation) shall be passed through to the partners or shareholders, respectively. Credits granted to a partnership or electing small business corporation (S corporation) shall be allocated among all partners or shareholders, respectively, either in proportion to their ownership interest in such entity or as the partners or shareholders mutually agree as provided in an executed document, the form of which shall be prescribed by the Director of the Department of Historic Resources.

B. To claim the credit authorized under this section, the taxpayer shall apply to the Virginia Department of Historic Resources, which shall determine the amount of eligible rehabilitation expenses and issue a certificate thereof to the taxpayer. The taxpayer shall attach the certificate to the Virginia tax return on which the credit is claimed.

C. When used in this section:

"Certified historic structure" means a property listed individually on the Virginia Landmarks Register, or certified by the Director of the Virginia Department of Historic Resources as contributing to the historic significance of a historic district that is listed on the Virginia Landmarks Register or certified by the Director of the Virginia Department of Historic Resources as meeting the criteria for listing on the Virginia Landmarks Register.

"Eligible rehabilitation expenses" means expenses incurred in the material rehabilitation of a certified historic structure and added to the property's capital account.

"Material rehabilitation" means improvements or reconstruction consistent with "The Secretary of the Interior's Standards for Rehabilitation," the cost of which amounts to at least fifty percent of the assessed value of such building for local real estate tax purposes for the year prior to the initial expenditure of any rehabilitation expenses.

D. The Director of the Department of Historic Resources shall establish by regulation the requirements needed for this program, including the fees to defray necessary expenses thereof, and, except as otherwise prohibited by this section, the extent to which the availability of the credit provided by this section is co-extensive with the availability of the federal tax credit for the rehabilitation of certified historic resources.

2. That the provisions of this act amending subsection A of § 58.1-339.2 of the Code of Virginia shall be effective for taxable years beginning on or after January 1, 1997.

3. That the provisions of this act amending subsection D of § 58.1-339.2 of the Code of Virginia are declaratory of existing law.

4. That the Director of the Department of Historic Resources is authorized to provide taxpayers the election of making a special one time transfer of their credits earned pursuant to § 58.1-339.2 of the Code of Virginia with respect to projects certified by the Department of Historic Resources on or before the final publication date of the regulations promulgated pursuant to subsection D of § 58.1-339.2.