A three-part application is required to qualify for the 20% tax credit. Historic preservation easements and the 10% credit use only Part 1 of the application.
Part 1 presents information about the significance and appearance of the building. Part 2 describes the condition of the building and the planned rehabilitation work. The proposed work will be evaluated based upon the Secretary of the Interior’s Standards for Rehabilitation—a set of 10 rules of practice. Part 3 of the application is submitted after the project is complete and documents that the work was completed as proposed. National Park Service approval of the Part 3 certifies that the project meets the Standards and is a "certified rehabilitation."
Working with the State Historic Preservation Office (SHPO)
All parts of the application are submitted to the SHPO where staff members review the application for completeness and accuracy. They may request additional information necessary for their review. They may visit the property. When they have finished their review, they send the application to the NPS with a recommendation as to whether the project meets the Standards for Rehabilitation.
National Park Service (NPS) Review
NPS receives the application from the SHPO and sends the owner a bill for the review fee (no fee applies to Part 1 reviews). After the fee is paid, NPS staff members review the application, and send the decision to the owner. Although every effort is made to follow the recommendation of the SHPO, the NPS decision may differ from that of the SHPO. By law, all certification decisions are made by the NPS.
Scope of Review
For purposes of the 20% tax credit, the project scope includes the entire building, along with any historically associated property under the same ownership. Individual condominiums or commercial spaces within a larger historic building are not considered individual properties apart from the whole.
The scope of review for a project is not limited to the work that qualifies as an eligible expense. The review encompasses the building’s site and environment, as well as any buildings that were functionally related historically. Therefore, any new construction and site improvements occurring on the historic property are considered part of the project.
The boundaries associated with the National Register listing may be used to determine which buildings on a property are eligible for the tax credit, but these boundaries do not limit the scope of review if part of the historic property lies outside that boundary.
For example, consider a historic property that consists of a school building, a separate gymnasium building, and playgrounds and ball fields. If the National Register boundary only includes the school building, that does not exclude the historically associated gymnasium, playground and ball fields from the scope of review. However, in order for work done on the gymnasium building to be eligible for the tax credit, the National Register nomination may need to be updated.