Under the State Program there is no continuing ownership requirement following completion of the rehabilitation. That said, it is strongly recommended that owners participating in the Virginia HRTC Program do not sell the building before a final certification letter is issued. In some instances, remediation of inappropriate or unapproved completed work is required to certify the project for tax credits. If the previous owner/tax credit applicant no longer owns the building, it may not be possible to complete the required work and so the overall project may be denied. Maintaining ownership of the building until the final certification is issued protects against this.
Please note that per Program regulations, the Virginia Department of Historic Resources reserves the right to inspect a rehabilitated property at any time during the first three years after completion, and to revoke certification if work was not undertaken as presented in the Part 3 application. Please see 17VAC10-30-50 (F) for more information.
Under the Federal Program, if the building is disposed of, or if it loses its income-producing status, within five years after the rehabilitation is completed, the taxpayer will face recapture of the credit. The amount of recapture is reduced by 20% in each succeeding year after the year the rehabilitation is completed. In other words, if the building is sold after one year, there will be recapture of 80% of the credit; if it is sold after two years, there will be recapture of 60% of the credit; and so forth.
The National Park Service reserves the right to inspect a rehabilitated property any time during first five years after completion, and to revoke certification if work was not undertaken as presented in the application, or if further unapproved alterations have been made since the tax credit project’s completion. The recapture rates discussed previously would then apply.