Last week NYS Assemblyman Sean Ryan announced that Governor Cuomo has included an extension of the Residential Rehabilitation Tax Credit in his amendments to the 2013-2014 Executive Budget Proposal. The residential historic tax credit allows individuals to receive a tax break for improving historically significant buildings or buildings in historic districts.
Before this announcement, the residential tax credit program was slated to expire at the end of 2014. The program enables owners of certified historic residences to take advantage of a state income tax credit of 20% of costs of improving their historic home. The owner of a home (individually listed in the National Register or part of a National Register district) located in an eligible census tract who undertakes pre-approved improvements costing more than $5,000 is eligible for a state income tax credit of 20% of the costs of rehabilitation, up to a credit of $50,000. At least 5% of that cost must be spent on the exterior, i.e. re-pointing a porch or having the roof replaced.
Thankfully, the tax credit program for historic homeowners has been extended to 2019. If the program had not been extended it would have automatically reverted to an earlier version. The earlier version of the program would only allow for a few neighborhoods to be eligible and would be limited to the amount of tax credits the state would provide. Additionally, if the program had reverted to the earlier version, the newly designated Elmwood Village District would have become ineligible for the tax credit benefits.
Governor Cuomo's proposed extension will avoid those problems, and the extended tax credit program will allow people to plan for future improvements, generate economic benefit, and ensure the stability and long term existence of historically significant areas.
"Extending the Residential Rehabilitation Tax Credit will allow homeowners with historic property to move forward on important projects that create good jobs for our local economy," said Ryan. "Western New York is home to many historic structures that can be transformed, renovated and brought back to life. The extension of this tax credit will help to preserve our historic structures, reduce blight and improve homes throughout the Elmwood Village East District."
In the same way that we need to reform the federal tax code to eliminate subsidies and loopholes, we also need to reform the state tax code to eliminate these ridiculous programs that (with the best of intentions) do little more than produce a photo op for a politician.
Rather than making the code more complicated and convoluted, we should simplify it so that we can afford to lower rates across the board for everyone.
The alternative would have a more catalytic economic impact (in being less of a disincentive to investment for everyone), and would be far less expensive and buraucratic a system to administer.