Income taxes: credits: rehabilitation of certified historic structures

The law offers income- and corporation-tax credits to help finance rehabilitation of qualifying California historic structures. It shifts awards from a fixed annual cap and first-come process to Legislature-funded, competitive allocations that prioritize housing production and preservation.

What the law does ​

• Provides a credit equal to 20% of qualified rehabilitation costs for certified historic structures placed in service during tax years 2027 through 2031.
• Caps each taxpayer’s credit at $5 million and allows unused credit amounts to be carried forward for up to seven years.
• Requires annual funding limits to be set in the Budget Act or another law, rather than using the prior fixed annual cap.
• Ranks applications by rehabilitation spending and housing units created, preserved, or rehabilitated, and reserves 20% of available credits for projects costing under $2.5 million.
• Requires, where feasible, allocations of 40% to Northern California, 40% to Southern California, and 20% to Central California.
• Ends the prior 25% enhanced credit and the credit for qualifying owner-occupied historic residences after the earlier program period.
• Requires reports on the prior program’s effectiveness by July 1, 2028, and annual reports on awards under the new program.

Who it affects ​

• Owners, developers, businesses, and partnerships rehabilitating California historic structures listed on the California Register of Historical Resources.
• Historic-rehabilitation projects that create, preserve, or rehabilitate housing units.
• Small rehabilitation projects with less than $2.5 million in qualified costs.

Context ​

The new credit applies to tax years beginning January 1, 2027, through December 31, 2031.