SB262 Alabama 2017 Session

Summary

Primary Sponsor

J.T. WaggonerSenator

Republican

Session

Regular Session 2017

Title

Historic buildings, income tax credit authorized for rehabilitation of

Summary

SB262 creates a new Alabama state income tax credit to encourage rehabilitation of certified historic structures, replacing the previous program that expired in 2016.

What This Bill Does

It establishes a 25% state income tax credit against the tax liability for qualified rehabilitation expenditures on certified historic structures, with annual and per-project caps. The program requires certification of structures, approved rehabilitation plans, and reserved credits by a committee, plus specific timelines to begin, continue, and complete rehabilitation. Credits are transferable (minimum 85% of value) and must be claimed in the year the rehabilitation is placed in service, funded through a dedicated Historic Preservation Income Tax Credit Account in the Education Trust Fund.

Who It Affects

• Owners, developers, and other taxpayers who rehabilitate certified historic structures in Alabama and may claim, transfer, or receive tax credits for those rehabilitations (including entities with leaseholds of 39 years or more and certain non-profit entities).
• State and local government agencies and officials administering the program (Alabama Historical Commission, Department of Revenue, Education Trust Fund, Historic Tax Credit Evaluating Committee) and related local tax assessors who certify, allocate, monitor, and enforce the credit.

Key Provisions

• Creates a Historic Preservation Income Tax Credit equal to 25% of qualified rehabilitation expenditures for certified historic structures against Alabama income tax.
• Annual cap of $5,000,000 for all property types (except residential); $50,000 cap for certified historic residential structures.
• Credits are transferable and can be assigned with a minimum value of 85% of the credit’s present value; transferees can use the credit to offset Chapter 18 tax, but the credit cannot be transferred again.
• Before starting substantial rehabilitation, owners must submit a rehabilitation plan and cost estimate; the Commission reserves credits and notifies the owner of the amount; reservations are ranked and issued as credits.
• Substantial rehabilitation standards and timelines: commence within 18 months of reservation, incur 50% more costs within 36 months, and complete within 60 months.
• Costs exceeding reserved credit may generate additional credits; credits are issued after review and certification, up to the reserved amount, or as excess credits if warranted.
• Credits must be claimed in the year the rehabilitation is placed in service; any credit beyond tax liability may be refunded.
• Pass-through entities (partnerships, LLCs, S corps, trusts) claim credits at the entity level.
• Annual reservations limited to $20,000,000 per year (2018-2027) plus any rescinded reservations; total reserved cannot exceed $200,000,000 through 2027; unreserved credits may be used in later years.
• Ad valorem tax notices must be sent to local taxing authorities when rehabilitation is placed in service to adjust property tax assessments.
• Recapture provisions apply to the original taxpayer; basis adjustments follow IRC rules; audits and enforcement rights exist.
• Historic Tax Credit Evaluating Committee (appointed members from state offices and legislators) allocates credits and sets guidelines for evaluating projects; includes quarterly meetings and public guidelines.
• Applications begin January 1, 2018; rules to implement the act must be issued by October 31, 2017; credits are not available for new applications submitted after December 31, 2027.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation