Neighborhood Preservation Tax Credit

Neighborhood Preservation Act

The deadline for the 2006 tax credit application will be November 18, 2005.

This act authorizes state tax credits for residential rehabilitation and construction costs for properties located in distressed communities* or defined census blocks.

Purpose
To provide an incentive for the rehabilitation or construction of owner-occupied homes in certain areas of the state.

Authorization
Sections 135.475 to 135.487, RSMo

How The Program Works
The Department of Economic Development (DED) issues state tax credits to a homeowner who rehabilitates a home or to a homeowner or developer that constructs a new home for owner-occupancy in certain areas of the state.

Eligible Areas
“Qualifying areas,” include “distressed communities,” as defined in 135.530, RSMo, and areas with a median household income of less than 70% of the median household income for the applicable MSA or non-MSA. “Eligible areas,” with a median household income of 70% to 89% of the median household income for the applicable MSA or non-MSA.

NEW CONSTRUCTION

Eligible Area

For new construction in the state of Missouri under this category, the following must apply:

The newly constructed residence must be replacing a residence that is equal to or more than forty years of age and is demolished for the purposes of constructing a replacement residence.

The residence is constructed on vacant property, which has been classified (for tax purposes) for not less than forty continuous years as residential, utility, commercial, railroad, or other real property.

If in a metropolitan statistical area or non-metropolitan statistical area, the property must be in a United States census block group which has a median household income of less than ninety percent (90%) but greater than or equal to seventy percent (70%) of the median household income for the metropolitan statistical area in which the census block group is located.

There is no minimum cost that you must incur for new construction. The maximum tax credit amount is $25,000 in any 10-year period. For example, if you spend $25,000 to construct your home, you could receive a $3,750 tax credit [$25,000 x 15% = $3,750]. NOTE: (You may be eligible to reapply continuously until you reach the $25,000 maximum tax credit amount if your “new construction” has not been completed and you have incurred additional construction expenses.)

Qualifying (Distressed Community) Area

If doing new construction in the state of Missouri under this category, the following must apply:

The land must have been vacant for at least two years and is or was occupied by a structure condemned by the local entity.

If in a metropolitan statistical area or non-metropolitan statistical area, the property must be in a United States census block group, which has a median household income of less than seventy percent (70%).