Introduction
The West Virginia Historic Rehabilitation Tax Credit, commonly known as the State Historic Tax Credit (HTC), encourages the rehabilitation of historic properties and serves as a proven economic development tool. It has successfully leveraged private investment, created jobs, supported additional housing development and played a key role in downtown revitalizations in Charleston, Huntington, Martinsburg and Wheeling.
Thirty-eight states, including West Virginia, maintain active state historic tax credit programs, all modeled after the successful Federal Historic Tax Credit (FHTC) administered by the National Park Service. In West Virginia, the State Historic Preservation Office (SHPO), under the Department of Arts, Culture and History, oversees the application and historic approval process, working closely with the Department of Revenue to administer the credits.
The West Virginia Historic Tax Credit
Established in 1999, the program provides a 25% credit based on a developer’s qualified rehabilitation expenditures (QREs) for the substantial rehabilitation of income-producing properties. The credit offers a dollar-for-dollar reduction in state income tax liability. Developers can claim the credits but generally transfer (sell) them to raise additional capital needed to support the rehabilitation. Credits represent a significant portion of the capital for these renovations and cannot be used or monetized until the rehabilitation is completed and certified.
Why Purchase West Virginia State Historic Tax Credits?
When developers transfer credits upon project completion and certification, other West Virginia income taxpayers — individuals, corporations or banks — can acquire them at a market discount driven by supply and demand. Buyers then apply the face value ($1.00) against their state tax liability.
Key motivations for purchasers include:
- Meaningful Tax Reduction: Acquiring credits provides an efficient, low-risk way to reduce West Virginia personal or corporate income tax liability. The discounted purchase price frequently delivers an effective return superior to many conventional investments — particularly valuable for entities with substantial or ongoing West Virginia tax exposure.
- Community and Economic Impact: Buyers indirectly fuel the revitalization of historic downtowns, blighted factories, abandoned schools and vacant office buildings across the state. These projects create jobs, elevate property values, boost tourism, and generate additional state and local revenue — contributing to long-term economic vitality.
- Low-Risk Profile with Flexibility: Credits arise from projects rigorously reviewed by the SHPO and National Park Service, minimizing uncertainty. For banks and financial institutions, purchasing credits may align well with Community Reinvestment Act (CRA) objectives, corporate social responsibility goals and community development strategies — offering a tangible way to support local growth while achieving tax efficiency.
In short, purchasing West Virginia State Historic Tax Credits represents a strategic opportunity to efficiently manage taxes while supporting the transformation of underutilized structures into vibrant assets — apartments, offices, retail spaces or hotels — that enhance community vitality.
Randy’s practice focuses on providing tailored legal solutions that drive economic development across business, energy, real estate, taxation, banking and financial services. He routinely handles transactional, litigation and administrative matters throughout the Appalachian region.
Jonah focuses his practice on banking and financial services, commercial litigation, real estate and taxation. Jonah regularly litigates matters in West Virginia and Ohio courts, represents clients before state agencies, and routinely handles administrative and transactional matters across Appalachia.
Nelson Mullins Riley & Scarborough LLP, is a member of the WVBA.
