2023 Colorado Revised Statutes › Title 39 - TAXATION (§§ 39-1-101 — 39-37-301) › SPECIFIC TAXES (§§ 39-20-101 — 39-37-301) › INCOME TAX (§§ 39-22-101 — 39-22-5508) › Article 22 - Income Tax (§§ 39-22-101 — 39-22-5508) › Part 5 - SPECIAL RULES (§§ 39-22-501 — 39-22-570) › Section 39-22-514 - [Effective 8/7/2024] Tax credit for qualified costs incurred in preservation of historic properties

(1)
(a)
Except as otherwise provided in paragraph (b) of this subsection (1), for income tax years commencing on or after January 1, 1991, but prior to January 1, 2020, there shall be allowed a credit with respect to the income taxes imposed pursuant to the provisions of this article to each taxpayer:
(I)
Who is the owner or qualified tenant of qualified property and who incurs qualified costs in an amount equaling or exceeding five thousand dollars in the qualified rehabilitation of such qualified property; or
(II)
Who is allowed a credit for costs incurred in the rehabilitation of property located in Colorado pursuant to the provisions of section 38 of the internal revenue code.
(b)
Any taxpayer who is allowed a credit for qualified expenditures incurred in the rehabilitation of property pursuant to the provisions of section
39-30-105.6
shall not be allowed the credit provided in paragraph (a) of this subsection (1).
(2)
(a)
The credit provided for in paragraph (a) of subsection (1) of this section shall not exceed an aggregate of fifty thousand dollars per qualified property or an amount equal to twenty percent of the aggregate qualified costs incurred per qualified property, whichever is less.
(b)
(Deleted by amendment, L. 99, p. 1278, § 1, effective June 3, 1999.)
(3)
(a)
Except as otherwise provided in paragraph (b) of this subsection (3) and subsection (6) of this section, in order for any taxpayer to qualify for the credit provided for in paragraph (a) of subsection (1) of this section, the taxpayer shall:
(I)
Except as otherwise provided in this subparagraph (I), submit a fee of two hundred fifty dollars, the plans and specifications for such proposed restoration, rehabilitation, or preservation, and a signed agreement, if any, specified in subsection (4) of this section to the appropriate reviewing entity and receive preliminary approval, in writing, from said reviewing entity stating that such proposed restoration, rehabilitation, or preservation constitutes qualified rehabilitation. In the discretion of the reviewing entity, the fee imposed pursuant to this subparagraph (I) may be reduced or eliminated when the amount of qualified costs expected to be incurred in connection with the restoration, rehabilitation, or preservation is less than fifteen thousand dollars. If any restoration, rehabilitation, or preservation has commenced prior to the submission of the application fee, plans and specifications, and signed agreement, if any, pursuant to the provisions of this subparagraph (I), the taxpayer shall also submit documentation satisfactory to the reviewing entity indicating the condition of the qualified property prior to commencement of the rehabilitation, including, but not limited to, photographs of the property and written declarations from persons knowledgeable about the property. For the purposes of this subparagraph (I), any owners of qualified property and any qualified tenants leasing said qualified property who wish to qualify for the credit provided for in paragraph (a) of subsection (1) of this section for said qualified property may jointly submit the fee and the plans and specifications, or such owners may submit the fee, the plans and specifications, and a list of qualified tenants leasing said qualified property and, if such owners or tenants have commenced restoration, rehabilitation, or preservation prior to the submission of the application fee, plans and specifications, and signed agreement, if any, pursuant to the provisions of this subparagraph (I), they shall also jointly submit such documentation as is required pursuant to this subparagraph (I).
(II)
Except as otherwise provided in subsection (5) of this section, complete the qualified rehabilitation of the qualified property within a period of twenty-four months from the date upon which preliminary approval was given pursuant to the provisions of subparagraph (I) of this paragraph (a);
(III)
Obtain a form from the reviewing entity verifying compliance with the provisions of this subsection (3). If more than one of the taxpayers have complied with the provisions of this subsection (3) for the same qualified property, the reviewing entity shall issue such verification form to each such taxpayer, and such verification form shall specify the proportion of the amount of the tax credit allowed to such taxpayer as determined pursuant to the provisions of subsection (4) of this section. The reviewing entity shall issue said verification form only upon the submittal of an accounting of total qualified costs incurred in said qualified rehabilitation and the names of the owners and qualified tenants who incurred such qualified costs, the payment of a fee in an amount determined pursuant to the provisions of paragraph (a) of subsection (11) of this section, and the making of the determination that such completed qualified rehabilitation:
(A)
Conforms to the plans and specifications approved pursuant to subparagraph (I) of this paragraph (a);
(B)
Was completed within the appropriate period of time; and
(C)
Preserves and maintains those qualities of such qualified property which made it eligible for inclusion individually or as a contributing property in a district in the state register of historic places or for designation as a landmark or as a contributing property in a historic district by a certified local government.
(IV)
Submit the verification form obtained pursuant to the provisions of subparagraph (III) of this paragraph (a) with the income tax return being filed by the taxpayer for the income tax year in which such qualified rehabilitation is completed.
(b)
The provisions of paragraph (a) of this subsection (3) shall not apply to any taxpayer who is allowed a credit for costs incurred in the rehabilitation of property located in Colorado pursuant to the provisions of section 38 of the internal revenue code.
(4)
When more than one taxpayer qualify for the tax credit provided for in paragraph (a) of subsection (1) of this section for the same qualified property, the amount of the tax credit allowed pursuant to the provisions of this section shall be divided pro rata according to the number of such taxpayers unless a binding agreement has been filed with the reviewing entity, as specified in subparagraph (I) of paragraph (a) of subsection (3) of this section, that is signed by all of the taxpayers who qualify for said tax credit for the same qualified property and that specifies the manner in which the amount of the tax credit allowed is to be divided among such taxpayers. Nothing in this subsection (4) shall preclude the state income tax credit created pursuant to this section from being allocated among taxpayers in a different manner than the allocation of any credit claimed pursuant to section 38 of the internal revenue code.
(5)
The reviewing entity may grant, upon request, a one-time extension of the completion deadline specified in subparagraph (II) of paragraph (a) of subsection (3) of this section. Such extension shall be for a period not to exceed twenty-four months and shall be granted only upon a showing of good cause.
(6)
(a)
(I)
Any taxpayer who was given preliminary approval prior to January 1, 2020, pursuant to the provisions of subparagraph (I) of paragraph (a) of subsection (3) of this section; whose completion deadline as set forth in subparagraph (II) of paragraph (a) of subsection (3) and in subsection (5) of this section is subsequent to December 31, 2019; and who has not completed the qualified rehabilitation prior to January 1, 2020, shall, in order to qualify for the credit provided for in paragraph (a) of subsection (1) of this section, obtain a form from the reviewing entity verifying compliance with the provisions of subparagraph (I) of paragraph (a) of subsection (3) of this section and this subsection (6). If more than one of the taxpayers have complied with said provisions for the same qualified property, the reviewing entity shall issue such verification form to each such taxpayer, and such verification form shall specify the proportion of the amount of the tax credit allowed to such taxpayer as determined pursuant to subsection (4) of this section.
(II)
The reviewing entity shall issue said verification form only upon the submittal of an accounting of total qualified costs incurred in said qualified rehabilitation prior to January 1, 2020, and the names of the owners and qualified tenants who incurred such qualified costs, the payment of a fee in an amount determined pursuant to the provisions of paragraph (a) of subsection (11) of this section, and the making of the determination that the portion of such qualified rehabilitation that was completed as of January 1, 2020:
(A)
Conforms to the plans and specifications approved pursuant to subparagraph (I) of paragraph (a) of subsection (3) of this section; and
(B)
Preserves and maintains those qualities of such qualified property which made it eligible for inclusion individually or as a contributing property in a district in the state register of historic places or for designation as a landmark or as a contributing property in a historic district by a certified local government.
(III)
The taxpayer shall submit the verification form obtained pursuant to this paragraph (a) with the income tax return being filed by the taxpayer for the income tax year commencing on or after January 1, 2019, but prior to January 1, 2020.
(b)
(Deleted by amendment, L. 99, p. 1278, § 1, effective June 3, 1999.)
(7)
(a)
Except as otherwise provided in paragraph (b) of this subsection (7), if the amount of the credit allowed pursuant to the provisions of this section exceeds the amount of income taxes otherwise due on the income of the taxpayer in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in said income tax year may be carried forward as a credit against subsequent years' income tax liability for a period not exceeding ten years and shall be applied first to the earliest income tax years possible. Any amount of the credit that is not used after said period shall not be refundable to the taxpayer.
(b)
Any taxpayer who has refunded an amount pursuant to the provisions of subsection (8) of this section shall no longer be eligible to carry forward any amount of the credit which had not been used as of the date such refund is made.
(8)
Notwithstanding any other law to the contrary, if any taxpayer who is the owner of qualified property and who has claimed the credit pursuant to the provisions of this section sells such qualified property within five years of the completion of the qualified rehabilitation or if any taxpayer who is a qualified tenant leasing qualified property and who has claimed the credit pursuant to the provisions of this section terminates the lease of such qualified property within five years of the completion of the qualified rehabilitation, the taxpayer shall refund the amount of the credit which has been used to offset income taxes which exceeds the following amounts:
(a)
Within the first year, an amount equal to zero percent of the amount of the credit allowed;
(b)
Within the second year, an amount equal to twenty percent of the amount of the credit allowed;
(c)
Within the third year, an amount equal to forty percent of the amount of the credit allowed;
(d)
Within the fourth year, an amount equal to sixty percent of the amount of the credit allowed;
(e)
Within the fifth year, an amount equal to eighty percent of the amount of the credit allowed.
(9)
Within eight months after April 20, 1990, the state historical society shall create appropriate forms and shall establish and promulgate criteria and procedures by which the restoration, rehabilitation, and preservation of qualified properties shall be determined to be qualified rehabilitation for the purposes of the credit provided for in paragraph (a) of subsection (1) of this section.
(10)
(a)
Each certified local government shall adopt a resolution stating whether such certified local government will act as a reviewing entity for the purposes of subsections (3) and (6) of this section. A copy of such resolution shall be sent to the state historic preservation officer.
(b)
Any certified local government which has decided to act as a reviewing entity for any given year for the purposes of subsections (3) and (6) of this section shall be required to perform all duties and responsibilities pursuant to said subsections (3) and (6) for all qualified rehabilitations which received preliminary approval from said reviewing entity during such year.
(11)
(a)
The amount of the fee required to be paid pursuant to the provisions of subparagraph (III) of paragraph (a) of subsection (3) and subparagraph (II) of paragraph (a) of subsection (6) of this section shall be an amount equal to the appropriate amount determined pursuant to the following schedule minus the amount of the fee paid pursuant to subparagraph (I) of paragraph (a) of subsection (3) of this section; except that, in the discretion of the reviewing entity, the fee imposed pursuant to this paragraph (a) may be reduced or eliminated where the amount of the qualified costs incurred is less than fifteen thousand dollars:
Amount of qualified costs incurred
Amount of fee
$5,000 up to and including $15,000
$ 250
Over $15,000 up to and including $50,000
$ 500
Over $50,000 up to and including $100,000
$ 750
Over $100,000
$ 1,000
(b)
(I)
Any certified local government which has decided to act as a reviewing entity for the purposes of subsections (3) and (6) of this section shall create a preservation fund. All fees collected pursuant to the provisions of subparagraphs (I) and (III) of paragraph (a) of subsection (3) and subparagraph (II) of paragraph (a) of subsection (6) of this section by a certified local government shall be credited to the preservation fund of such certified local government. The moneys in such fund shall be used for expenditures of such certified government incurred in the performance of its duties pursuant to the provisions of this section.
(II)
All fees collected pursuant to the provisions of subparagraphs (I) and (III) of paragraph (a) of subsection (3) and subparagraph (II) of paragraph (a) of subsection (6) of this section by the state historic preservation officer shall be transmitted to the state treasurer, who shall credit said fees to the state historic preservation fund, which fund is hereby created. The moneys in the state historic preservation fund shall be subject to annual appropriation by the general assembly to the state historical society for expenditures of the state historic preservation officer and the state historical society incurred in the performance of their duties pursuant to the provisions of this section and for expenditures incurred in the administration and general operations of the state historical society.
(11.5)
Notwithstanding the amount specified for any fee in this section, the executive director by rule or as otherwise provided by law may reduce the amount of one or more of the fees if necessary pursuant to section
24-75-402 (3)
, C.R.S., to reduce the uncommitted reserves of the fund to which all or any portion of one or more of the fees is credited. After the uncommitted reserves of the fund are sufficiently reduced, the executive director by rule or as otherwise provided by law may increase the amount of one or more of the fees as provided in section
24-75-402 (4)
, C.R.S.
(11.7)
(a)
If the revenue estimate prepared by the staff of the legislative council in December 2010 and each December thereafter indicates that the amount of the total general fund revenues for that particular fiscal year will not be sufficient to grow the total state general fund appropriations by six percent over such appropriations for the previous fiscal year, then the credit authorized in this section shall not be allowed for any income tax year commencing during the calendar year following the year in which the estimate is prepared; except that any taxpayer who would have been eligible to claim a credit pursuant to this section in the income tax year in which the credit is not allowed shall be allowed to claim the credit earned in such income tax year in the next income tax year in which the estimate indicates that the amount of the total general fund revenues will be sufficient to grow the total state general fund appropriations by six percent over such appropriations for the previous fiscal year.
(b)
The department of revenue shall, through its website, specify on or before January 1, 2011, and on or before each January 1 thereafter, whether the credit authorized in this section shall be allowed for a given income tax year pursuant to paragraph (a) of this subsection (11.7).
(12)
As used in this section, unless the context otherwise requires:
(a)
"Certified local government" means any local government certified by the state historic preservation officer pursuant to the provisions of 54 U.S.C. sec. 302502, as amended.
(b)
"Contributing property" means property which by location, design, setting, materials, workmanship, feeling, and association adds to the sense of time, place, and historical development of a historic district.
(c)
"Designated" means established by local preservation ordinance.
(d)
"Property" means a building or structure or a unit of a multiunit building where such units are individually owned.
(e)
"Qualified costs" means costs associated with the qualified rehabilitation of a qualified property. "Qualified costs" includes, but is not limited to, costs associated with demolition, carpentry, sheetrock, plaster, painting, ceilings, fixtures, doors and windows, fire sprinkler systems, roofing and flashing, exterior repair, cleaning, tuckpointing, and cleanup. "Qualified costs" does not include costs, commonly referred to as soft costs, which include, but are not limited to, costs associated with appraisals; architectural, engineering, and interior design fees; legal, accounting, and realtor fees; loan fees; sales and marketing; closing; building permit, use, and inspection fees; bids; insurance; project signs and phones; temporary power; bid bonds; copying; and rent loss during construction. "Qualified costs" also does not include, but shall not be limited, costs associated with acquisition; interior furnishings; new additions except as may be required to comply with building and safety codes; excavation; grading; paving; landscaping; routine or periodic maintenance; repairs to outbuildings which are associated with a qualified property and which are less than fifty years old; and repairs to additions made to a qualified property after such property was included individually or as a contributing property in a district in the state register of historic places or was designated as a landmark or as a contributing property in a historic district by a certified local government.
(f)
"Qualified property" means property located in Colorado which is:
(I)
At least fifty years old; and
(II)
(A)
Listed individually or as a contributing property in a district on the state register of historic properties pursuant to the provisions of article
80.1
of title
24
, C.R.S.;
(B)
Designated as a landmark by a certified local government; or
(C)
Listed as a contributing property within a designated historic district of a certified local government.
(g)
"Qualified rehabilitation" means any exterior improvements, structural improvements, mechanical improvements, plumbing improvements, or electrical improvements undertaken to restore, rehabilitate, or preserve the historic character of a qualified property which meets the standards of rehabilitation of the United States secretary of the interior as adopted by the state historic preservation officer and certified local governments pursuant to federal law; but shall not include any improvements undertaken due to normal wear and tear which occurred to a qualified property. As used in this paragraph (g), "exterior improvements" includes, but is not limited to, improvements made to the exterior of the qualified property and to the exterior of any historic outbuildings which are associated with the qualified property and which are fifty or more years old. "Exterior improvements" does not include enlargements, additions, landscaping, routine or periodic maintenance, paving, and site work.
(h)
"Qualified tenant" means a taxpayer who holds a lease of five years or longer on qualified property or a portion of such qualified property.
(i)
"Reviewing entity" means:
(I)
A certified local government which has decided pursuant to the provisions of paragraph (a) of subsection (10) of this section to perform the duties specified in subparagraph (I) of paragraph (a) of subsection (3) of this section; or
(II)
The state historic preservation officer when such qualified property either is not located within the jurisdiction of any certified local government or is located within the jurisdiction of any certified local government who has decided pursuant to the provisions of paragraph (a) of subsection (10) of this section not to perform the duties specified in subparagraph (I) of paragraph (a) of subsection (3) of this section.
(j)
"State historic preservation officer" means the person designated and appointed pursuant to the provisions of 54 U.S.C. sec. 302301, as amended.
(k)
"Taxpayer" means:
(I)
A resident individual; or
(II)
A domestic or foreign corporation subject to the provisions of part 3 of this article.
Amended by 2024 Ch. 490,§ 78, eff. 8/7/2024.
L. 90: Entire section added, p. 1730, § 1, effective April 20. L. 94: (1)(a) and (6)(a) amended, p. 1369, § 1, effective May 25. L. 98: (11.5) added, p. 1347, § 82, effective June 1. L. 99: IP(1)(a), (2), IP(3)(a), (3)(a)(I), (4), (6), (7)(a), (10)(a), and (11)(a) amended, p. 1278, § 1, effective June 3. L. 2008: IP(1)(a), (6)(a)(I), IP(6)(a)(II), (6)(a)(III), and (10)(a) amended and (11.7) added, p. 2266, § 1, effective August 5. L. 2009: (11.7)(a) amended, (SB 09 -228), ch. 410, p. 2265, § 19, effective July 1; (6)(a)(I) amended, (SB 09 -292), ch. 369, p. 1980, § 114, effective August 5.
2024 Ch. 490, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
This section is set out more than once due to postponed, multiple, or conflicting amendments.
For additional funding by the general assembly to the state historical society, see § 24-80-202.5 .