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small part of the building. It also includes

CALCULATING THE CREDIT

part time uses such as a haunted house or

For example, Mr. Harrison owns an apart-

rental for a weekend trade show. Use of

ment building which has been vacant for

the yard outside of a building will not

three years. The building is 22 years old.

affect the vacant status of the building

During 2007, Mr. Harrison invests $450,000

itself.

in repairing ceilings, fixtures, doors, win-

COMMON QUESTIONS

dows and the roof. Of that amount,

Harrison spent $50,000 on engineering.

How is commercial use defined on a mixed-

Since engineering costs do not qualify for

use project where the ground floor is

the rehabilitation credit, only $400,000 will

developed for retail and the upper floor for

be used to calculate the credit.

residential use?

Total qualified

Only the costs directly associated with the

rehabilitation expenditures ...... $400,000

commercial portion of the project would

25 percent of qualified

qualify for the tax credit.

expenditures ............................ $100,000

Is there a minimum length of time that a

Credit allowed ........................... $ 50,000

rehabilitated building must remain in

commercial use to qualify for the credit?

Since the credit for rehabilitation of vacant

commercial buildings is limited to $50,000

There is no time limit that the building

per building, Mr. Harrison may take a

must be used commercially. However, if

credit of only $50,000.

the commercial use is too short, an

argument may be made that the building

Mr. Harrison’s 2007 income tax liability is

wasn’t truly renovated for commercial use

$10,000. He may carry forward the remain-

and the credit would be disallowed.

ing $40,000 credit for as much as five years.

FURTHER INFORMATION

BUILDING REQUIREMENTS

FYIs, commonly used forms and additional tax

information are available on the Web at

“Building” means any structure built for

permanent use as a house, factory, etc.,

which is valued separately for general

Visit

property tax purposes. A structure that has

for additional enterprise zone information.

been subdivided into multiple ownership

units, such as office condominiums, is still

For additional Colorado tax information visit

considered one building unless the

the "Tax Information Index" which covers a

subdivision occurred more than twenty

years ago. A single business entity

variety of topics including links to forms,

consisting of related structures on the same

publications, regulations, statutes and general

site, such as an old motor court, that is

questions and answers. The "Tax Information

valued as one unit for property tax purposes

Index" is located at

will be considered one building. The

determination of what constitutes a building

FYIs provide general information concerning a

is integral in determining the applicability

variety of Colorado tax topics in simple and

of the $50,000 limitation on the credit.

straightforward language. Although the

FYIs represent a good faith effort to provide

“Commercial Building” means any building

accurate and complete tax information, the

that produces income.

information is not binding on the Colorado

Department of Revenue, nor does it replace,

In order to qualify for the credit, a building

alter or supersede Colorado law and regula-

must be completely vacant for two years

tions. The Executive Director, who by

prior to the commencement of remodeling.

statute is the only person having authority to

Any use during the two-year period will

bind the Department, has not formally

disqualify the building from qualifying for

the credit. This includes limited uses such

reviewed and/or approved these FYIs.

PAGE 2 OF 4

as storage, warehouse, or use of only a

INCOME 24 (02/09)

Form Dr 0076 - Certification Form Of Qualified Nature Of Enterprise Zone Rehabilitation Expenditures - 2009 Page 2

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