Page 381 - Small Business IRS Training Guides

The legislation:

• Requires taxpayers take the 20-percent credit ratably over five years instead of in the year the qualified

rehabilitated building is placed in service

• Eliminates the 10 percent rehabilitation credit for the Pre-1936 buildings

A transition rule provides relief to owners of either a certified historic structure or a Pre-1936 building by allowing owners

to use the prior law if the project meets these conditions:

• The taxpayer owns or leases the building on January 1, 2018, and continues to own or lease the building at all
times thereafter

• The 24- or 60-month period selected by the taxpayer for the substantial rehabilitation test begins by June 20, 2018

Audit Considerations

Although the TCJA eliminated the 10 percent credit and amended the 20 percent credit, the law generally retained the
other requirements presented in the Prior Law section of these training materials.

The following determinations must be made:

• The building must have been in service prior to the rehabilitation

• If the transition rule applies, the building must have been owned or leased by the taxpayer on January 1, 2018 and

at all times thereafter

• The building must be a qualified rehabilitated building. This requirement applies to Pre-1936 buildings and certified
historic structures

 A pre-1936 building must also meet wall retention requirements

73233-102 13402-7 Tax Cuts and Jobs Act