Revenue and Taxation Code section 17053.92
(a)
(1)In lieu of the amount of credit computed pursuant to Section 47(a) of the Internal Revenue Code, the amount of credit for the taxable year shall be 20 percent of the qualified rehabilitation expenditures with respect to a certified historic structure.(2)
The maximum credit allowed pursuant to this section shall not exceed five million dollars ($5,000,000) per taxpayer.(b)
For purposes of this section, the following definitions shall apply:(1)
“Certified historic structure” has the same meaning as defined in Section 47(c)(3) of the Internal Revenue Code, that is a structure in this state and is listed on the California Register of Historical Resources.(2)
“Housing unit” means one or more habitable rooms that are occupied or that are intended or designed to be occupied by one family with facilities for living, sleeping, cooking, and eating.(3)
(A)“Qualified rehabilitation expenditure” has the same meaning as that term is defined in Section 47(c)(2) of the Internal Revenue Code, except that qualified rehabilitation expenditures may include expenditures in connection with the rehabilitation of a building without regard to whether any portion of the building is or is reasonably expected to be tax-exempt use property.(B)
The amendments made by Section 13402(b)(1)(B) of the Tax Cuts and Jobs Act of 2017 (Public Law 115-97) to Section 47(c)(2)(B)(iv) of the Internal Revenue Code, relating to certified historic structure, shall not apply.(c)
(1)To be eligible for the credit allowed by this section, a taxpayer shall request a tax credit allocation from the California Tax Credit Allocation Committee, in conjunction with the State Office of Historic Preservation.(2)
To obtain a tax credit allocation, the taxpayer shall provide necessary information, as determined by the State Office of Historic Preservation and the California Tax Credit Allocation Committee, including, but not limited to, all of the following:(A)
The location of the structure proposed for rehabilitation and demonstration of site control.(B)
Documentation showing the structure is listed on the California Register of Historical Resources.(C)
A projection of the number of housing units created, preserved, or rehabilitated by the proposed rehabilitation.(D)
An enumeration of the qualified rehabilitation expenses associated with proposed rehabilitation.(E)
Evidence of a financing gap that necessitates the tax credit for completion of the rehabilitation project.(F)
Evidence the project shall commence no later than 180 calendar days after the award of the tax credit allocation.(G)
An attestation that the project has not already been completed prior to the submission of the application.(3)
A tax credit allocation provided to a taxpayer shall not constitute a determination by the California Tax Credit Allocation Committee with respect to any of the requirements of this section regarding a taxpayer’s eligibility for the credit authorized by this section.(4)
The State Office of Historic Preservation shall establish in regulations the time period that a taxpayer who receives a tax credit allocation must commence rehabilitation after the issuance of the tax credit allocation. If rehabilitation is not commenced within the time period established by the office, the tax credit allocation shall be forfeited and the credit amount associated with the tax credit allocation shall be treated as an unused allocation tax credit amount.(d)
A deduction shall not be allowed under this part for any expense for which a credit for that expense is allowed by this section.(e)
If a credit is allowed under this section with respect to any property, the basis of that property shall be reduced by the amount of the credit allowed.(f)
(1)A credit allowed under this section shall be claimed in the first taxable year in which the structure is placed in service.(2)
In the case where the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and the seven succeeding years, if necessary, until the credit is exhausted.(g)
For purposes of this section, the State Office of Historic Preservation shall do all of the following:(1)
Adopt regulations to implement the requirements of this section. The regulations shall comply with the requirements of the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).(2)
Establish a written application, on a form jointly prescribed by the office and the California Tax Credit Allocation Committee, for the allocation of the tax credit. The written application shall require the applicant to include a summary of the expected economic benefits of the project. The economic benefits shall include, but are not limited to, all of the following:(A)
The number of jobs created by the rehabilitation project, both during and after the rehabilitation of the structure.(B)
The expected increase in state and local tax revenues derived from the rehabilitation project, including those from increased wages and property taxes.(C)
Any additional incentives or contributions included in the rehabilitation project from federal, state, or local governments.(3)
Establish a process to determine that applicants meet the requirements of this section and to ensure that the rehabilitation project meets the Secretary of the Interior’s Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations.(4)
Establish a process to approve, or reject, all tax credit allocation applications.(h)
For purposes of this section, the State Office of Historic Preservation, in coordination with the California Tax Credit Allocation Committee, shall do all of the following:(1)
Establish a process jointly to implement the provisions of this section.(2)
(A)(i)Allocate an aggregate amount of credits under this section and Section 23692, not to exceed the amount authorized by the Legislature in the annual Budget Act or another measure, plus any carryover of unallocated credits from prior years.(ii)
For purposes of allocating credits, applicants shall be ranked based on a scoring system that considers qualified rehabilitation expenditures of each applicant and the number of new housing units developed by each applicant. The score of each applicant shall be expressed as a monetary value calculated as the sum of the following:(I)
The qualified rehabilitation expenditures associated with the proposed project.(II)
The number of housing units created, preserved, or rehabilitated by the proposed rehabilitation multiplied by six hundred thousand dollars ($600,000).(B)
(i)The State Office of Historic Preservation and the California Tax Credit Allocation Committee shall ensure, to the extent feasible, that 40 percent of credits are allocated to northern California, 40 percent of credits are allocated to southern California, and 20 percent of credits are allocated to central California.(ii)
For purposes of this subparagraph, the following definitions apply:(I)
“Northern California” means the Counties of Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Monterey, Napa, Trinity, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, and Sonoma.(II)
“Southern California” means the Counties of Imperial, Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, and Ventura.(C)
A taxpayer shall be allocated a tax credit pursuant to the taxpayer’s tax credit allocation upon receipt by the California Tax Credit Allocation Committee of a cost certification for the qualified rehabilitation expenditures. For projects with qualified rehabilitation expenditures in excess of two hundred fifty thousand dollars ($250,000), the cost certification shall be issued by a licensed certified public accountant.(D)
(i)Allocations shall be made twice per year as follows:(I)
The State Office of Historical Preservation shall accept applications from August 1 through August 31, with evaluation of those applications occurring between September 1 and September 30, and allocations being announced no later than October 15.(II)
The State Office of Historical Preservation shall accept applications from February 1 through February 28, with evaluation of those applications occurring between March 1 and March 31, and allocations being announced no later than April 15.(ii)
The State Office of Historic Preservation shall accept applications pursuant to the schedule set in clause (i) beginning on August 1, 2027.(E)
Twenty percent of credits available for allocation shall be reserved for allocation to applicants with qualified rehabilitation costs of less than two million five hundred thousand dollars ($2,500,000).(3)
Certify tax credits allocated to taxpayers.(4)
Provide the Franchise Tax Board no later than December 1 of each year an annual list of the taxpayers that were allocated a credit pursuant to this section and Section 23692, including each taxpayer’s taxpayer identification number, and the amount allocated to each taxpayer.(i)
In the case of any application for tax credits by an entity treated as a partnership for income tax purposes:(1)
Credits awarded to a partnership shall be allocated to the partners of that partnership in accordance with the partnership agreement, regardless of how the federal historic rehabilitation tax credit with respect to the project is allocated to the partners, or whether the allocation of the credit under the terms of the partnership agreement has substantial economic effect, within the meaning of Section 704(b) of the Internal Revenue Code.(2)
To the extent the allocation of the credit to a partner under this section lacks substantial economic effect, any loss or deduction otherwise allowable under this part that is attributable to the sale or other disposition of that partner’s partnership interest made prior to the expiration of the tax credit recapture period for the project described in paragraph (1) shall not be allowed in the taxable year in which the sale or other disposition occurs, but shall instead be deferred until, and treated as if, it occurred in the first taxable year immediately following the taxable year in which the tax credit recapture period expires for the project described in paragraph (1). The credits awarded to a partnership shall be allocated to the partners of that partnership in accordance with the partnership agreement.(j)
For purposes of this section, the provisions of subsection (a) of Section 50 of the Internal Revenue Code shall apply.(k)
Notwithstanding any other provision of this part, a credit allowed pursuant to this section may reduce the tax imposed under Section 17041 or 17048 plus the tax imposed under Section 17504, relating to the separate tax on lump-sum distributions, below the tentative minimum tax.(l)
This section shall remain in effect regardless of the expiration or repeal of Section 47 of the Internal Revenue Code, relating to rehabilitation credit.(m)
The California Tax Credit Allocation Committee and the State Office of Historic Preservation may charge a reasonable fee in an amount that does not exceed the reasonable costs incurred by the California Tax Credit Allocation Committee and the State Office of Historic Preservation in fulfilling the responsibilities described in paragraphs (3) and (4) of subdivision (g) and subdivision (h) and paragraphs (3) and (4) of subdivision (g) and subdivision (h) of Section 23692.(n)
(1)For purposes of complying with Section 41, for this section and Section 23692, the Legislature finds and declares:(A)
The specific goal of these credits is to help address the high costs of rehabilitating California’s historic buildings while preserving their cultural significance and stimulating economic growth.(B)
The performance indicators for the Legislature to use in determining whether the credit is achieving its stated goal shall be the number of taxpayers allocated a credit pursuant to this section or Section 23692, and the total dollar value of credits allocated.(2)
(A)The State Office of Historical Preservation shall, no later than June 1, 2028, and annually thereafter, submit a report to the Legislature, in compliance with Section 9795 of the Government Code, stating the number of taxpayers allocated a credit, and the total dollar value of credits allocated.(B)
The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.(o)
This section shall remain in effect only until December 1, 2032, and as of that date is repealed.
Source:
Section 17053.92, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17053.92. (updated Sep. 27, 2026; accessed Oct. 5, 2026).
