Extended Rehabilitation Credit Deadlines

The IRS released Notice 2020-58 which provides relief to taxpayers in satisfying the substantial rehabilitation test due to the Coronavirus pandemic.

lease accountingIn order to qualify a building for the rehabilitation credit, projects must meet the “substantial rehabilitation test” within a 24- or 60-month period for determining whether the rehabilitation work is satisfactory.

The relief allows taxpayers that have a measuring period under the substantial rehabilitation test ending between April 1, 2020 and March 31, 2021, now have until March 31, 2021 to satisfy the test. It applies to the substantial rehabilitation test for claiming the credit or qualifying under the TCJA transition rule.

Generally, the rehabilitation credit is required to be claimed over a five-year period for amounts that taxpayers pay or incur for qualified rehabilitation expenditures after December 31, 2017. Taxpayers may claim the credit all in one year under pre-TCJA rules for projects that qualify under a transition rule.

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