Qualified Rehabilitation Expenditures

AuthorWilliam F. Machen
Pages23-26
Only qualied rehabilitation expenditures are eligible for the
Rehabilitation Tax Credit. A qualied rehabilitation expenditure
includes any amount chargeable to capital account and incurred
in connection with the rehabilitation (including reconstruction)
of a “qualied rehabilitated building” that is depreciable under
Code §168 and that is (i)nonresidential real property, (ii)resi-
dential rental property, or (iii)real property having a class life of
more than 12.5 years.47 A qualied rehabilitated building means
a building (and its structural components) if (i)such building has
been substantially rehabilitated, (ii)such building was placed in
service before the beginning of the rehabilitation, (iii)in the case
of a building other than a certied historic structure, certain exter-
nal wall and internal structural framework conditions are satised,
and (iv)depreciation (or amortization in lieu of depreciation) is
allowable with respect to the building.48
As noted, earlier, the Code provides that the Rehabilitation Tax
Credit is not available in the case of the rehabilitation of property
used predominantly to furnish lodging unless the property is a
certied historic structure.49
47. I.R.C. §47(c)(2).
48. I.R.C. § 47(c)(1).
49. I.R.C. § 50(b)(2). See Section 1.
23
Qualied Rehabilitation
Expenditures 4
Machen_RehabTaxCr_20150513_08-49_ConfirmationPass.indd 23 5/14/15 8:56 AM

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