{"id":1189,"date":"2025-11-15T11:07:00","date_gmt":"2025-11-15T19:07:00","guid":{"rendered":"https:\/\/huddlestontaxcpas.com\/?page_id=1189"},"modified":"2025-11-19T14:22:21","modified_gmt":"2025-11-19T22:22:21","slug":"tax-credits-landlords","status":"publish","type":"page","link":"https:\/\/huddlestontaxcpas.com\/tax-guides\/rental-property\/tax-credits-landlords\/","title":{"rendered":"Understanding Tax Credits vs. Deductions"},"content":{"rendered":"\n<p>Before diving into specific credits, it&#8217;s essential to grasp the fundamental difference between a tax credit and a deduction. A <strong>tax credit<\/strong> directly reduces your tax liability, dollar-for-dollar. For instance, a $1,000 tax credit means you pay $1,000 less in taxes. Conversely, a <strong>deduction<\/strong> lowers your <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/what-is-taxable-income\/\">taxable income<\/a>, which indirectly reduces your tax bill.<\/p>\n\n\n\n<p>This article will explore two valuable tax credits that can significantly benefit small to medium-sized businesses: the Rehabilitation Tax Credit and the Low-Income Housing Tax Credit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Rehabilitation Tax Credit<\/h3>\n\n\n\n<p>The Rehabilitation Tax Credit offers a substantial incentive for businesses that renovate historic buildings. This credit can be particularly advantageous for businesses looking to revitalize older properties.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Qualifying Properties<\/strong><\/h4>\n\n\n\n<p>To be eligible for the Rehabilitation Tax Credit, a building must meet one of the following criteria:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Certified Historic Structure:<\/strong> Listed on the National Register of Historic Places or located in a registered historic district.<\/li>\n\n\n\n<li><strong>Substantially Rehabilitated:<\/strong> The rehabilitation costs exceed the greater of the building&#8217;s adjusted basis or $5,000. The building must have been placed in service before the rehabilitation and before 1936, and a certain percentage of its original structural framework must be preserved.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Credit Amount<\/strong><\/h4>\n\n\n\n<p>The credit amount depends on the type of building:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Certified Historic Structure:<\/strong> 20% of qualified rehabilitation expenditures.<\/li>\n\n\n\n<li><strong>Non-Certified Historic Structure:<\/strong> 10% of qualified rehabilitation expenditures.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Low-Income Housing Tax Credit<\/h3>\n\n\n\n<p>The Low-Income Housing Tax Credit is designed to encourage the development of affordable housing. It provides tax credits to developers who build or rehabilitate rental housing for low-income families.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Eligibility Requirements<\/strong><\/h4>\n\n\n\n<p>To qualify for the Low-Income Housing Tax Credit, a project must:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Meet Occupancy Thresholds:<\/strong> Commit to either:\n<ul class=\"wp-block-list\">\n<li>20% of units rented to households with incomes at or below 50% of area median income.<\/li>\n\n\n\n<li>40% of units rented to households with incomes at or below 60% of area median income.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Restrict Rents:<\/strong> Maintain rent restrictions for at least 30 years.<\/li>\n\n\n\n<li><strong>Meet Other Requirements:<\/strong> Comply with additional IRS guidelines, such as income verification and tenant selection procedures.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Credit Amount<\/strong><\/h4>\n\n\n\n<p>The credit amount is allocated by state agencies to developers through a competitive process. The specific credit amount varies depending on factors like the location of the project, the number of affordable units, and the level of income restriction.<\/p>\n\n\n\n<p><strong>Note:<\/strong> Due to the complexity of these tax credits, it&#8217;s strongly recommended to consult with a tax professional, such as a CPA or tax attorney, to determine your eligibility and maximize the benefits.<\/p>\n\n\n\n<p>Photo by <a href=\"https:\/\/unsplash.com\/@timbatec\" target=\"_blank\" rel=\"noreferrer noopener\">Pepi Stojanovski<\/a> on <a href=\"https:\/\/unsplash.com\/photos\/closeup-photo-of-100-us-dollar-banknotes-MJSFNZ8BAXw\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Unsplash<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Before diving into specific credits, it&#8217;s essential to grasp the fundamental difference between a tax credit and a deduction. A tax credit directly reduces your tax liability, dollar-for-dollar. For instance, a $1,000 tax credit means you pay $1,000 less in taxes. Conversely, a deduction lowers your taxable income, which indirectly reduces your tax bill. This [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":7144,"parent":958,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"content-sidebar","footnotes":""},"class_list":{"0":"post-1189","1":"page","2":"type-page","3":"status-publish","4":"has-post-thumbnail","6":"entry"},"_links":{"self":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/pages\/1189","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/comments?post=1189"}],"version-history":[{"count":5,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/pages\/1189\/revisions"}],"predecessor-version":[{"id":7145,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/pages\/1189\/revisions\/7145"}],"up":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/pages\/958"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/media\/7144"}],"wp:attachment":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/media?parent=1189"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}