Ohio Expands Historic Rehabilitation and Opportunity Zone Investment Tax Credits

With rising interest rates and construction costs soaring, the real estate and construction industry has felt significant pressure recently. Ohio Governor Mike DeWine intends to relieve some of that pressure with Senate Bill 225 (S.B. 225), which he signed into law on June 14, 2022. The bill specifically enhances both the Ohio Historic Preservation Tax Credit and the Ohio Opportunity Zone Investment Tax Credit. 

Ohio Historic Preservation Tax Credit Updates

S.B. 225:

• Doubles the credit cap to $120 million from $60 million for fiscal years 2023 and 2024. The cap reverts to $60 million in FY 2025.
• Doubles the annual credit allocation on a single project to $10 million, up from $5 million.
• Allows for a full refund of the credit amount that exceeds actual tax due — up to the $10 million limit (previously limited to $3 million).
• Increases the historic preservation credit amount from 25% to 35% of qualified rehabilitation expenses in any county, township or municipal corporation with a population under 300,000 (according to 2020 census data). 

These changes automatically apply between the bill’s 90-day effective date and before July 1, 2024. An owner of a project that was approved after June 30, 2020, and before the bill’s 90-day effective date, can reapply for an enhanced credit provided they have not yet begun construction on the project.

Ohio Opportunity Zone Investment Tax Credit Updates

S.B. 225:

• Increases the cap for FY 2022-2023 biennium to $75 million, then converts to an annual cap of $50 million for FY 2024 before dropping to $25 million in subsequent fiscal years.
• Expands eligibility to investors not subject to personal income tax, such as corporations.
• Allows taxpayers to transfer a whole or partially used credit certificate an unlimited number of times and allows transfers by persons other than the original certificate recipient. In previous years, a taxpayer could not use any portion of the credit prior to transferring it, and it could only be transferred once.
• Creates two annual application periods, from January 10 to February 1, and July 10 to August 1, covering the preceding six months.

The passage of S.B. 225 includes nothing but positive changes to the programs listed above and is welcoming news for real estate developers — signaling that legislators intend to continue building on the momentum for development in Ohio communities.

Contact Wesley Skupski at wskupski@cohencpa.com, Adam Hill at ahill@cohencpa.com or Angel Rice at arice@cohencpa.com to discuss these items further.

Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.