{"data":{"id":"us-ky/krs-171.397","jurisdiction":"us-ky","citation":"KRS 171.397","heading":"Rehabilitation of certified historic structures -- Qualified rehabilitation","body":"expenses -- Tax credit -- Penalty -- Administrative regulations -- Sunset.\n(1) (a) For all applications for a preliminary approval received prior to April 30,\n2010, t here shall be allowed as a credit against the taxes imposed by KRS\n141.020, 141.040, 141.0401, or 136.505, an amount equal to:\n1. Thirty percent (30%) of the qualified rehabilitation expenses, in the case\nof owner-occupied residential property; and\n2. Twenty percent (20%) of the qualified rehabilitation expenses, in the\ncase of all other property.\nIn the case of an exempt entity that has incurred qualified rehabilitation\nexpenses, the credit provided in this subsection shall be available to transfer\nor assign as provided under subsection (8) or (9) of this section.\n(b) For applications for preliminary approval received on or after April 30, 2010,\nthe credit shall be refundable if the taxpayer makes an election under\nsubsection (2)(b) of this section.\n(2) (a) A taxpayer seeking the credit provided under subsection (1) of this section\nshall file an application for a preliminary determination of maximum credit\neligibility before April 30 of the year in which the proposed project will\nbegin. The application shal l describe the project and shall include\ndocumentation supporting the qualification of the project for the credit, the\nproposed start date, the proposed completion date, the projected qualified\nrehabilitation expenses, and any other information the council  may require.\nThe council shall determine the preliminary maximum credit available for\neach taxpayer and shall notify the taxpayer of that amount by June 30 of the\nyear in which the application was filed. If total credits applied for in any year\nexceed the certified rehabilitation credit cap, plus any amounts added to the\ncap pursuant to paragraph (c) of this subsection, the provisions of subsection\n(5) of this section shall be applied to reduce the approved credits for all\ntaxpayers with qualifying applications for that year.\n(b) 1. An application for a final determination of credit shall be submitted to\nthe council upon completion of the project.\n2. The application shall include an irrevocable election by the taxpayer to:\na. Use the credit, in which case, the credit shall be refundable; or\nb. Transfer the credit.\n3. The council shall determine the final amount of credit approved for each\ntaxpayer based upon the actual expenditures, preliminary determination\nof maximum credit, and a determination that the expenditures are\nqualified rehabilitation expenses.\n4. The council shall notify the taxpayer and Department of Revenue of the\nfinal approved credit amount within sixty (60) days of t he receipt of a\ncompleted application from the taxpayer.\n(c) 1. If the total amount of credits finally approved for a taxpayer under\nparagraph (b) of this subsection are less than the credits initially\napproved for a taxpayer under paragraph (a) of this su bsection, the\ndifference between the two (2) amounts shall be added to the certified\nrehabilitation credit cap for the next calendar year.\n2. If the total amount of credits approved under paragraph (a) of this\nsubsection in any calendar year is less than t he certified rehabilitation\ncredit cap, the difference between the credits actually awarded and the\ncertified rehabilitation credit cap shall be added to the certified\nrehabilitation credit cap for the next calendar year.\n(3) (a) The maximum credit which m ay be claimed with regard to owner -occupied\nresidential property shall be one hundred twenty thousand dollars ($120,000)\nsubject to subsection (5) of this section. The credit in this section shall be\nclaimed for the taxable year in which the certified rehabilitation is completed.\n(b) The maximum credit which may be claimed with regard to all other property\nthat is not owner -occupied residential shall be ten million dollars\n($10,000,000) subject to subsection (5) of this section. The credit in this\nsection s hall be claimed for the taxable year in which the certified\nrehabilitation is completed.\n(4) In the case of a husband and wife filing separate returns or filing separately on a\njoint return, the credit may be taken by either or divided equally, but the com bined\ncredit shall not exceed one hundred twenty thousand dollars ($120,000) if subject to\nthe limitation in subsection (3)(a) of this section, or ten million dollars\n($10,000,000) if subject to the limitation in subsection (3)(b) of this section, subject\nto the provisions of subsection (5) of this section.\n(5) The credit amount approved for a calendar year for all taxpayers under subsection\n(2)(a) of this section shall be limited to the certified rehabilitation credit cap. When\nthe total credits applied for and approved in any year under subsection (2)(a) of this\nsection exceed the certified rehabilitation credit cap, the council shall apportion the\ncertified rehabilitation credit cap as follows: The certified rehabilitation credit cap\nfor the year under co nsideration shall be multiplied by a fraction, the numerator\nwhich is the approved credit amount for an individual taxpayer for a calendar year\nand the denominator which is the total approved credits for all taxpayers for a\ncalendar year.\n(6) (a) For all applications received prior to April 30, 2010, if the credit amount that\nmay be claimed in any tax year as determined under subsections (3) to (5) of\nthis section exceeds the taxpayer's total tax liabilities under KRS 136.505,\n141.020, or 141.040 and 141.04 01, the taxpayer may carry the excess tax\ncredit forward until the tax credit is used, provided that any tax credits not\nused within seven (7) years of the taxable year the certified rehabilitation was\ncomplete shall be lost.\n(b) For all applications recei ved on or after April 30, 2010, if the credit amount\nthat may be claimed in any tax year as determined under subsections (3) to (5)\nof this section exceeds the taxpayer's total tax liabilities under KRS 136.505,\n141.020, or 141.040 and 141.0401, the taxpay er may receive a refund, if the\ntaxpayer elected to take the credit as required by subsection (2)(b) of this\nsection.\n(7) (a) The credit shall apply against both the tax imposed by KRS 141.020 or\n141.040 and the limited liability entity tax imposed by KRS 141.0401, with\nthe ordering of credits as provided in KRS 141.0205.\n(b) 1. For applications received prior to April 30, 2010, if the taxpayer is a\npass-through entity not subject to the tax imposed by KRS 141.040, the\ntaxpayer shall apply the credit at the  entity level against the limited\nliability tax entity imposed by KRS 141.0401, and shall also pass the\ncredit through in the same proportion as the distributive share of income\nor loss is passed through.\n2. For applications received on or after April 30, 2010, if the taxpayer is a\npass-through entity not subject to the tax imposed by KRS 141.040, the\ntaxpayer shall apply the credit at the entity level against the limited\nliability tax entity imposed by KRS 141.0401, and may receive a refund\nif the taxpayer  elected to take the credit as required by subsection\n(2)(b)2.a. of this section.\n(8) Credits received under this section may be transferred or assigned if an election is\nmade under subsection (2)(b) of this section, for some or no consideration, along\nwith any related benefits, rights, responsibilities, and liabilities to a financial\ninstitution as defined in KRS 141.010 subject to the taxes imposed by KRS\n136.505, 141.040, or 141.0401. Within thirty (30) days of the date of any transfer of\ncredits, the party transferring the credits shall notify the Department of Revenue of:\n(a) The name, address, employer identification number, and bank routing and\ntransfer number, of the party to which the credits are transferred;\n(b) The amount of credits transferred; and\n(c) Any additional information the Department of Revenue deems necessary.\nThe provisions of this subsection shall apply to any credits that pass through to a\nsuccessor or beneficiary of a taxpayer.\n(9) For purposes of this section, a lessee of a certif ied historic structure shall be treated\nas the owner of the structure if the remaining term of the lease is not less than the\nminimum period promulgated by administrative regulation by the council.\n(10) The taxes imposed in KRS 141.020, 141.040, and 141.04 01 shall not apply to any\nconsideration received for the transfer, sale, assignment, or use of a tax credit\napproved under this section.\n(11) The Department of Revenue shall assess a penalty on any taxpayer or exempt entity\nthat performs disqualifying work, as determined by the Kentucky Heritage Council,\non a certified historic structure for which a rehabilitation has been certified under\nthis section in an amount equal to one hundred percent (100%) of the tax credit\nallowed on the rehabilitation. Any penal ties shall be assessed against the property\nowner who performs the disqualifying work and not against any transferee of the\ncredits.\n(12) The council may impose fees for processing applications for tax credits, not to\nexceed the actual cost associated with processing the applications.\n(13) The council may authorize a local government to perform an initial review of\napplications for the credit allowed under this section and forward the applications to\nthe council with its recommendations.\n(14) The council and the Department of Revenue may promulgate administrative\nregulations in accordance with the provisions of KRS Chapter 13A to establish\npolicies and procedures to implement the provisions of subsections (1) to (13) of\nthis section.\n(15) The tax credit authorized by this section shall apply to tax periods ending on or\nafter December 31, 2005.\n(16) This section applies to applications received before April 30, 2026.","path":["KRS Chapter 171"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=56937","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:51:22Z","sha256":"67ce947a41b7572839eb1de4f05d058dcc20f373dedf330a910fd4ed10b9d61f","source_id":"us-ky","stale":false,"prev":"us-ky/krs-171.3963","next":"us-ky/krs-171.398"},"notice":"GroundRules: Original legal text. Not legal advice."}