Tax Credit Program

Illinois Historic Preservation Tax Credit Program

Program Description

The Illinois Historic Preservation Tax Credit Program provides a state income-tax credit equal to 25% of a project’s qualified expenditures to owners of certified historic structures located within River Edge Redevelopment Zones (Aurora, East St. Louis, Elgin, Peoria & Rockford) who undertake certified rehabilitations during the taxable year. The substantial rehabilitation investments will create jobs in Illinois, stimulate the economies of River Edge communities, and revitalize historic structures and neighborhoods. An awarded tax credit may not be sold or otherwise transferred to another person or entity. The Illinois Historic Preservation Tax Credit Program runs from January 1, 2012 to December 31, 2021. Originally set to expire on December 31, 2016, the program was extended for one year when Governor Rauner signed Senate Bill 1488 and again for another four years with Senate Bill 1783.

The Illinois Historic Preservation Tax Credit Program is operated by the Illinois Department of Commerce and Economic Opportunity (DCEO), in consultation with the Illinois State Historic Preservation Office at DNR (IL SHPO). DCEO shall determine the amount of eligible rehabilitation costs and expenses, and IL SHPO and the National Park Service (NPS) shall determine whether the rehabilitation is consistent with the Secretary of the Interior's Standards for Rehabilitation (Standards). All work on the project (interior and exterior) must meet the Standards. Upon review of the completed project and its Certification by the NPS, DCEO shall issue a Certificate to the owner in the amount of eligible tax credits.

Program Requirements

Projects must meet the following five requirements:

  1. The structure must be located within a River Edge Redevelopment Zone (designated portions of Aurora, East St. Louis, Elgin, Peoria, and Rockford). To determine whether your property is within one of these five River Edge Redevelopment Zones, contact the city’s Zone administrator, whose contact information is listed on DCEO's website.

  2. The structure must be certified as historic, which means that it must meet one of these three criteria:

    1. listed individually on the National Register of Historic Places, or

    2. a contributing building within a National Register historic district, or

    3. a contributing building within a local historic district that has been certified by the National Park Service for the purposes of taking the federal tax credit.

      To determine whether a property is a certified historic structure, contact Andrew Heckenkamp, IL SHPO’s National Register Coordinator.

  3. Qualified expenditures must equal or exceed $5,000 and must exceed 50% of the purchase price of the property when it last sold. If the owner is also applying for the 20% Federal Historic Rehabilitation Tax Credit, that program’s minimum expenditure is $5,000 or the building’s adjusted basis, whichever is greater.

  4. The structure must be used for income-producing purposes, such as rental-residential, commercial, agricultural, and/or industrial.

  5. The qualified taxpayer / historic-structure owner must be in good standing with the Illinois Department of Revenue.

Application Process and Forms

The 25% state tax credit is designed to be used in conjunction with the 20% Federal Historic Rehabilitation Tax Credit. The three short forms of the state application (PARTS A, B and C) coordinate with the three parts of the federal application (PARTS 1, 2 and 3). It is anticipated that the vast majority of applicants will be applying for both the state and federal credit programs. Therefore, the state form has been designed to compliment and not duplicate the federal form. Click here for DCEO's webpage on the state tax credit. Click here to see the NPS’s webpage on the 20% federal credit and application. It is highly recommended that prior to construction, applicants discuss their projects with DCEO at 312-814-9407 (via email at CEO.HistoricCredit@illinois.gov) or with IL SHPO at 217-524-0276. Two copies of the three parts of each application and all accompanying material must be mailed to IL SHPO at:

Illinois State Historic Preservation Office
Attn: Illinois Historic Preservation Tax Credit Program
Illinois Department of Natural Resources
1 Natural Resources Way
Springfield, Illinois 62702

 

The basic application sequence is as follows:

  1. The applicant mails two hard copies of the following two forms and their accompanying information to IL SHPO. They must be approved prior to the completion of the project:

    PART A, State Tax Credit Application

    “Certification of River Edge Location”

    PART A certifies that the property is within a designated River Edge Redevelopment Zone. The applicant must obtain the signature of the respective River Edge Zone administrator. Applicant must mail two copies each of:

    • the signed PART A
    • map of the River Edge Zone with the building highlighted

     

    PART 1, Federal Tax Credit Application

    “Evaluation of Significance”

    PART 1 certifies that the building is historic for the purposes of the 20% federal tax credit. Applicant must mail two copies each of:

    • the signed PART 1
    • labeled set of representative photographs of the exterior of the building

     


  2. Preferably before construction commences, the applicant mails two hard copies of these two forms and their accompanying information to IL SHPO:

    PART B, State Tax Credit Application

    “Rehabilitation Stage”

    PART B verifies the contact information of the owner and applicant. Applicant must mail two copies of:

    • the signed PART B

     

    PART 2, Federal Tax Credit Application

    “Description of Rehabilitation”

    PART 2 describes the scope of work for the entire project. Applicant must mail two copies each of:

    • the signed PART 2
    • labeled set of photographs
    • sets of current drawings (if they exist)

     


  3. It is highly recommended that applicants coordinate with IL SHPO early in the design process to ensure that the project will meet the Secretary of the Interior's Standards for Rehabilitation. Any work done prior to approval of the PART 2 will be at the owner’s own risk and could disqualify the project for both the state and federal credits. The National Park Service will charge applicants a fee before it will review the PART 2; there is no charge at this stage for the PART B (state credit).

  4. The applicant mails two hard copies of the following two forms and their accompanying information to IL SHPO. They must be approved prior to the completion of the project:

     

     

    PART 3, Federal Tax Credit Application

    “Request for Certification of Completed Work”

    PART 3 certifies that the work has been done as it was described in the PART 2. Applicant must mail two copies each of:

    • the signed PART 3
    • labeled photographs

     


  5. The National Park Service will charge a balance of the review fee, based upon the final project cost, before it reviews the PART 3.

  6. The applicant mails two hard copies of the following two forms and their accompanying information to IL SHPO. They must be approved prior to the completion of the project:

    PART C, State Tax Credit Application

    “Certification of Qualified Expenditures”

    PART C certifies and lists the project’s qualified expenditures. Applicant must mail two copies each of:

    • the signed PART C
    • a summary of expenses
    • copies of proof of payment (i.e., invoices, receipts, etc.).

     

     

     

  7. When the state tax credit certificate is issued, a fee of up to 2% of the value of the issued state tax credits will be collected from the applicant. DCEO will explain the fee process and the amount owed when the tax-credit certificate is issued.
  8. Applicants must submit one completed ITR-1 form (“Request for Tax Clearance”) to the Illinois Department of Revenue by fax at 217-785-2643 or by mail at the following address:

Illinois Department of Revenue
Problems Resolution, (3-515)
PO Box 19014
Springfield, IL 62794-9014

Application submittal / workflow:

  1. Applicant downloads both application forms
  2. Applicant completes and mails two copies of PART A and PART 1 and their supporting materials to IL SHPO.
  3. IL SHPO forwards one PART A packet to DCEO and retains one.
  4. IL SHPO processes PART 1 and sends one PART 1 packet to NPS and retains one. NPS sends a letter to applicant certifying the property as historic.
  5. Applicant completes and mails two copies of PART B and PART 2 and their supporting materials to IL SHPO. These forms may be submitted simultaneously with PART A and PART 1.
  6. IL SHPO reviews PART 2 for compliance with the Secretary of the Interior's Standards for Rehabilitation. IL SHPO may request additional documentation, suggest modifications to the project, or schedule a site inspection.
  7. IL SHPO forwards one PART B to DCEO and retains one.
  8. IL SHPO forwards one PART 2 packet to the NPS for review and retains one. The NPS invoices or charges the owner a fee to review PART 2.
  9. NPS reviews PART 2 and sends a preliminary determination to the applicant that the proposed work meets (or does not meet) the Standards.
  10. If work changes from the approved PART 2, the applicant submits two copies of a federal amendment sheet with supporting materials to IL SHPO. IL SHPO reviews, forwards one amendment packet it to NPS for review and retains one.
  11. When construction is complete, applicant mails two copies of PART 3 and its supporting materials to IL SHPO.
  12. IL SHPO reviews PARTS 3 to determine its concordance with the approved PART 2. IL SHPO may request additional documentation or a site visit.
  13. When documentation is complete, IL SHPO forwards one PART 3 packet to NPS for review and retains one. NPS invoices or charges the applicant the remainder of the appropriate fee for its review of PART 3.
  14. When NPS receives the fee, it reviews PART 3, approves it as meeting the Standards (or denies it), and returns it to the applicant.
  15. When the applicant receives approved PART 3 from NPS, the applicant mails two copies of PART C and its supporting materials to IL SHPO.
  16. IL SHPO forwards one PART C packet to DCEO and retains one.
  17. DCEO reviews PART C. If approved, DCEO requests from the applicant an issuance fee of 2% of the tax credit amount.
  18. Applicant submits the fee to DCEO.
  19. DCEO mails the tax credit certificate to the eligible owner.
  20. Applicant completes the ITR-1 form and mails or faxes it to the Illinois Department of Revenue.

Important Program and Agency Links:

For the PART A application for the Illinois Historic Preservation Tax Credit.

For the PART B application for the Illinois Historic Preservation Tax Credit.

For the PART C application for the Illinois Historic Preservation Tax Credit.

For a guide and important information regarding Part C completion.

For a sample financial spreadsheet to submit with your Part C documents.

For the PARTS 1, 2, 3 of the Federal Historic Preservation Tax Credit and guidance on how to fill them out.

For the specific program language in the law that establishes this program (Illinois Public Act 097-0203).

For the extension of the program until December 31, 2021 (Illinois Public Act 100-0236).

For a private letter ruling from the Illinois Department of Revenue regarding various issues related to the credit (IT 15-0001-PLR).

For the definitions for “Qualified Expenditures, Qualified Historic Structure & Qualified Taxpayer.”

 

For the National Park Service’s webpage on the 20% credit and the federal application.

For information about DCEO's River Edge Redevelopment Zones.

Contact Us

For questions about the Illinois Historic Preservation Tax Credit Program, please contact DCEO at 312-814-9407 or via email at CEO.HistoricCredit@illinois.gov or contact IL SHPO at 217-524-0276.

For questions about architectural work, the Secretary of the Interior's Standards for Rehabilitation, or the Federal Historic Preservation Tax Credit process, please contact IL SHPO at 217-524-0276 or via email at HPA.Incentives@illinois.gov.