Qualifying for the Program as a Homeowner
As an owner-occupant, you must spend at least $5,000.00 in a twenty-four month period on your rehabilitation in order to qualify for the program. While you may spend more than $250,000.00 on your rehabilitation in a twenty-four month period, you cannot receive credit for any expenditures exceeding $250,000.00. In other words, homeowners are only eligible to receive a maximum of $50,000.00 in tax credits during a consecutive twenty-four month period (this can be in one or multiple applications).
Additionally, once a tax credit recipient, you are required to keep your home in compliance with the Secretary of the Interior's Standards for Rehabilitation for five years. If after receiving a tax credit, you do something to your home that does not adhere to these Standards, you must give back a portion of the tax credits that you received, this is known as recapture. The credit vests twenty percent (20%) every year for five years. So if you received a $100,000.00 credit in 2001 and you violated the Standards with new work you did to your home in 2003, two years after you received the credit, you will be required to return sixty percent (60%) of the credit to the State .
Important note about recapture if you were to sell your home before the five year period expires:
If you receive a credit in 2001 and sell your home in 2003, you do not have to give back any portion of the credit and the buyer of your home will NOT be bound to the Secretary of Interior's Standards. In essence, your obligation to the State is over the day you sign the title over to the new buyer.
Last, it is important to consider that this program is an all or none program. What that means is that you can't just decide to do some renovations on your property that qualify and receive the credit on those items and not other renovations that would not qualify. All renovations must qualify and meet the Secretary of the Interior's Standards for Rehabilitation. If you complete 100 tasks in your renovations and 1 of the completed tasks violates the Standards, you will not receive credit for the other 99 tasks that met the Standards. This is one reason why we recommend using a consultant to help assist you in completing this process so as to remove the guess work.