2024 Schedule HR-5 Instructions 
 
 Purpose of Schedule HR-5 

Schedule HR-5 is used to claim the supplement to the federal historic rehabilitation tax when the credit is required to be 
claimed over five years and the credit is transferred before the end of that five year period.  
 
Note: Definitions not found in these instructions can be found at sec. 71.28(6), Wis. Stats., and sec. 41 of the Internal 
Revenue Code (IRC) and the related Treasury Regulations. 
 
 Timing for Calculating and Claiming the Credit 

Calculating the credit 
•  By default, the credit is calculated in the year a rehabilitated property is placed in service. 
•  By election, the credit is calculated in the year the Qualified Rehabilitation Expenditures (QREs) are paid. 
Claiming the credit 
When the credit is calculated using Qualified Rehabilitation Expenditures (QREs) paid or incurred before December 31, 
2017, or the transition rule applies, 100% of the credit is claim in the year calculated. Schedule HR is used to claim  the 
credit and is attached to the Wisconsin tax return in the year calculated. 
 
When the credit is calculated using Qualified Rehabilitation Expenditures (QREs) paid or incurred after December 31, 
2017, and the transition rule does not apply, the credit  must be claimed over a 5 year period. Schedule HR is used to 
report 20% of the calculated credit and is attached to the Wisconsin tax return beginning with the year the credit is 
calculated and for the following four years unless the credit is transferred.  
 
When a credit subject to the 5 year spread is transferred before 100% of the credit has been claimed (before filing 
Schedule HR for the year the credit is calculated and the following 4 years), any amount of the transferred credit not yet 
claimed is reported on Form HR-5. This removes a claimant's requirement to file a Schedule HR for a credit that is no 
longer owned.  
 
The transitional rule applies to a rehabilitated building when (1)  the claimant is the owner for the entire period after 
December 31, 2017, and (2) the 24-month or 60-month measurement period used to determine if a building is 
substantially rehabilitated must have begun no later than June 20, 2018. 
Important limitations  
•  If the QREs also produce a federal historic rehabilitation credit, the credit cannot be claimed in a different taxable year 
   than federal historic rehabilitation credit. 
•  A transferred credit is first available to be claimed by the purchaser for the taxable year in which it is purchased or 
   transferred. 
 
   Wisconsin Agencies Administering the Credit 

•  The Wisconsin  Historical  Society  administers  the  rehabilitation requirements of  the  historic  preservation  program. 
   For more information, visit the Historical Society’s website at: wisconsinhistory.org/Content.aspx?dsNav=N:            1189, 
   write to the Division of Historic Preservation, Wisconsin Historical Society, 816 State Street, Madison, WI 53706-1417, 
   or call (608) 264-6490. 
•  The Wisconsin Economic  Development Corporation  (WEDC)  certifies the maximum amount of supplement to  the 
   federal historic rehabilitation credits that may be awarded. For more information, contact WEDC at: wedc.org/inside-
   wedc/contact-us/#regional or call 1-855-469-4249. 
•  The Department of Revenue (DOR) administers claiming and using historic tax credits on tax returns and certifies credit 
   transfers.  For  more  information,  visit  the  department's  website  at: revenue.wi.gov/Pages/FAQS/pcs-historic-
   transfer.aspx, email us at: DORFranchise@wisconsin.gov, or call (608) 266-2772.      
   
  Qualifications to Claim the Credit 
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                                           2024 Schedule HR-5 Instructions 

To qualify for the supplement to the federal historic rehabilitation tax credit, the following requirements must be met: 
• The claimant must own (or, in certain cases, lease) property being rehabilitated.  
   
• The rehabilitation project must be approved by the National Park Service or Wisconsin Historical Society and design 
  must adhere to the “Secretary of the Interior’s Standards for Rehabilitation.” 
• The Wisconsin Economic Development Corporation (WEDC) must have been certified the project. 
• The QREs must exceed $50,000. 
• The rehabilitated property is, listed on the national register of historic places in Wisconsin, or the state register of historic 
  places, or is determined by the state historical society to be eligible for listing on the national register of historic places 
  in Wisconsin or the state register of historic places, or is located in a historic district that is listed in the national register 
  of historic places in Wisconsin or the state register of historic places and is certified by the state historic preservation 
  officer as being of historic significance to the district, or is an otherwise eligible property certified by the state historic 
  preservation officer as contributing to the historic significance of the property.  
• For certified historic structures, qualified rehabilitation expenditures means that the building must be depreciable 
  property that is either nonresidential rental property, residential rental property, or real property with a class life of more 
  than 12.5 years. If only part of the building qualifies only the rehabilitation expenditures allocable to the qualified portion 
  may be used to figure the credit. 
• For a qualified rehabilitated building, the building must have been placed in  service  prior to the  rehabilitation  and 
  substantially rehabilitated after.  See sec. 41, IRC, for the definition of substantially rehabilitated. 
• For certified historic structures, a building is considered to be substantially rehabilitated if QREs incurred during the 
  within a 24-month (or, for phased rehabilitation projects, a 60-month) measurement period selected by the claimant 
  exceeds the greater of $5,000 or the rehabilitated property’s adjusted basis (as defined for the substantially rehabilitation 
  test under sec. IRC 41, IRC). 
Date a Project Is Begun 
The date a project is “begun” is the date on which the physical work of rehabilitation begins. The physical work of 
rehabilitation does not include preliminary activities such as planning, designing, securing financing, exploring, 
researching, developing  plans  and  specifications, or stabilizing a building to prevent deterioration, such as placing 
boards over broken windows. 
The Basis of the Rehabilitated Property 
When the supplement to the federal historic rehabilitation tax credit is claimed, the qualified rehabilitation expenditures 
must be added to the basis of the building and depreciated using the straight-line method. In addition, the credit amount is 
subtracted from the basis of the building. 
Carryover of Unused Credits 
The historic rehabilitation credits are nonrefundable. Any unused credits may be carried forward for 15 years. If there is a 
reorganization of a corporation claiming historic rehabilitation credits, the limitations provided by sec. 383, IRC, may apply 
to the carryover of any unused credits. 
Recovery of Credits 
In cases where the Wisconsin Historical Society later determines that the claimant hasn’t complied with all of the 
requirements for the state historic rehabilitation credit, DOR may recover all or a portion of the credit. 
If DOR adjusts or disallows, in whole or in part, a credit that has been transferred, only the person who originally transferred 
the credit to another person is liable to repay the adjusted or disallowed amount. 
 
If the same  qualified  rehabilitation expenditures are used to  claim the federal rehabilitation tax  credit and  Wisconsin 
supplement to the federal historic rehabilitation tax credit, and the federal credit is required to be repaid, the Wisconsin 
credit must also be repaid. 
 
 Specific Line Instructions 
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                                           2024 Schedule HR-5 Instructions 

Section A – Claimant Information 
 
Lines (2) and (7) – Identifying number. Only the last four digits are required. 
If the claimant is: 
• A corporation or a single member LLCs that is not disregarded use the federal employee identification number (FEIN).  
• An Individual use the social security number. 
• A sole member of a disregarded entity otherwise eligible to claim the credit use the sole member’s identifying number 
  on line (2).  Check the line (6) box and enter the disregarded entity’s FEIN on line (7). If the disregarded entity does not 
  have a FEIN, enter NONE.  
Lines (5) and (9) - Contact information 
The department will use this information if additional information is required. 
 
A claimant may authorize a third party designee to discuss credit related information with the department by completing 
lines (8) and (9). However, a Power of Attorney may still be needed. 

• A Power of Attorney (Form A 222)‑    executed by the taxpayer is required in order for the taxpayer’s representative to 
  perform certain acts on behalf of the taxpayer and to receive and inspect certain tax information, including receiving the 
  Notice of Certification letter. The form is available atrevenue.wi.gov/DORForms/a‑ 222.pdf.       
• As an alternative to appointing a Power of Attorney, you may designate a third party to discuss the processing of Form 
  HR‑ T. Note: The third-party designee cannot receive the Notice of Certification letter on behalf of the taxpayer. If you 
  want to allow another person you choose to discuss your Form HR‑T with the Department of Revenue, check the box. 
  If you check the box, you are authorizing the department to discuss with the designee any questions that may arise, 
  and the designee to provide additional information to the department. 

Section B – The Rehabilitated Property 
Line (1) - The Project Name  
The national and state registers of historic properties often include an identifying name that may change as a result of the 
rehabilitation.  Enter the name as it that appears after the rehabilitation. 
Lines (2) and (3) – The Project Address 
 A rehabilitated property may consist of multiple addresses, enter the address identified on the WEDC contract. 

Section C – Credit Information 
Line (1) – The total credit being claimed  
Lines (1a) and (1b) – Fiduciaries Only 
• Line 1(a) – Prorate the credit from line 1 between the entity and its beneficiaries in proportion to the income allocable 
  to each. Show the beneficiaries part of the credit on line 1a. Show the credit for each beneficiary on Schedule 2K-1. 
• Line 1(b) – Subtract line 1a from line 1. This is the estate’s or trust’s portion of the credit. 
Line (2) – The claimed credit  
• There are several ways a claimant may become the owner a credit. Check all that apply to the sum of credits being 
  claimed on line (1).  
Line (3) – Claimant is owner of the rehabilitated property   
When a C-corporation or individual owns a rehabilitated property subject to the 5 year claim requirement there are three 
scenarios a Schedule HR-5 is used to claim the credit. 
• The credit is calculated and transferred in the current year – use Lines 3(a) to 3(k). 

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                            2024 Schedule HR-5 Instructions 

• The credit being transferred was calculated and claimed in one of the previous four years – use Lines 3(l) to 3(o). 
• The credit being transferred is the combination of the two scenarios – Line 3(p) = line 3(k) plus line 3(o). 
 
Line 3(a) – The Wisconsin Economic Development Corporation is required to certify a historic rehabilitation project as 
eligible for the Wisconsin supplement to the federal rehabilitation credit.  Once eligibility is approved, WEDC and the property 
owner sign a contract.  Enter the number that appears at the upper right corner of the applicable contract.   If the property 
owner is claiming and transferring credits from multiple contracts complete multiple Schedule HR-5. 
 
Line 3(b) – Enter the adjusted basis of the historic property prior to incurring Qualified Rehabilitation Expenses (QREs)  
 
Lines 3(c) and 3(d) – Check the box for the credit associated with WEDC contract on line 3(a).  See Calculating, Claiming 
and Transferring the Credit on page 1 of the instructions. 
 
Line 3(e) – The adjusted basis for the substantially rehabilitation test is the sum of the purchase price and the eligible 
expenditures  that are of the nature to be capitalized rather than expensed, even if those expenditures have not yet been 
capitalized. 
 
Lines 3(f) and 3(g) – Enter the beginning and ending date of the measuring period used for the substantially rehabilitated 
test.  
• The end date of the measuring period must occur in the same tax year the rehabilitated property is placed in service. 
• The total QREs used to calculate the credit are not limited to those incurred during the measuring period. 
• The measuring period does not apply if the election is made to claim the credit in the year the expenditures are incurred. 
• See the sec. 41, IRC, and related Treasury Regulations for additional information about the measuring period. 
Lines 3(h) to 3(j) – Enter the amounts as described. Line 3(j) is the total calculated credit, not the amount being claimed 
due to a current year transfer.  A claimant may transfer and claim all or part of a calculated credit. 
 
Line 3(k) – Enter the amount of the credit calculated in the current year that is being transferred in the current year and 
therefore required to be claimed. Enter the applicable amounts on lines 3(k)(i) to 3(k)(v).  
 
Line 3(l) – If the claimant is transferring a credit that was calculated in one of the prior four years (but not transferred until 
the current year), enter the WEDC contract number associated with that credit.  
 
Line 3(m) – Enter the total credit amount associated with the WEDC contract on line 3(l).  This amount is located on line 3 
of the related Schedule HR previously filed with the claimant’s Wisconsin income tax return.  
 
Line 3(o) – Enter the amount of line 3(m) being transferred in the current year that was not previously claimed. 
 
Line 4 - Historic rehabilitation credit calculated using QREs allocated from a pass-through entity 
If the claimed credit was calculated using QREs allocated from an estate or trust, partnership or LLC treated as a 
partnership, or tax-option (S) corporation, complete lines 4(a) to 4(j) as indicated. 
 
When a pass-through entity is the owner of the rehabilitated property subject to the 5 year claim requirement the eligible 
costs incurred by the pass-through entity are allocated to the owners using the ownership interest percentage or, a special 
partnership allocation percentage if indicated in the partnership agreement. Once the eligible costs are allocated, the 
owner as the claimant determines the method for calculating and claiming the credit. 
• By default, the allocated costs are accumulated until the rehabilitated property is placed in service at which time the 
  credit is calculated. 
• Alternatively, the claimant may elect to calculate the credit in the year the eligible costs are incurred. This election is 
  made at the owner level and there is no requirement all owners must make the same election. 
   
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                                            2024 Schedule HR-5 Instructions 

Line 5 - Historic rehabilitation credit received in a previous transfer 
If the claimant became the owner of the claimed credit as the transferee in a previous transfer, complete lines 5(a) to 5(e) 
as indicated. 
Line 6 – Total credits from additional Schedules HR-5 
If the claimed credit was obtained from more than one WEDC contract reported on Lines 3 or 4 or from multiple transfers 
reported on Line 5 additional Schedule HR-5s are completed.  If applicable enter the total of all additional Schedule HR-5s. 
 
 Required Attachments  

1.  Include the final certification of completed work from the National Park Service  
o  For properties not yet listed in  the National Register of Historic Places, include a copy of  the signed letter from the 
   National Park Service certifying  that the completed rehabilitation meets the “Secretary of  the Interior’s Standards 
   for Rehabilitation.” If you haven’t  received the final certification by the time the tax return is filed, include a copy of 
   the  “Historic Preservation Certification Application (Part 2 - Description of Rehabilitation).”   
o  Include a copy of the final certification of completed work  to the first income or franchise tax return filed after receipt 
   of the certification along with an explanation of the  amount and the years in which the credit was claimed.  If the 
   credit is passed through from a partnership, LLC  treated as a partnership, tax- option (S) corporation, estate, or 
   trust, include a copy of your Schedule 3K-1, 5K-1,  or 2K-1 instead of the final certification.       
o  If the credit of a partnership or LLC treated as a partnership is allocated as provided in a written agreement, the 
   partnership or LLC must also attach a copy of the  agreement to its partnership return (Wisconsin Form  3), and 
   each  partner  or  member  receiving  the  credit  must attach a copy of the agreement to the return on  which they 
   claim the credit. 
2.  A copy  of  the  certification  of  eligibility  issued  by  the Wisconsin Economic Development Corporation. 
3.  If you are claiming a carryover of the supplement to the  federal historic rehabilitation credit from a prior taxable  year, 
   include Schedule CF with your tax return. 
  
 Transfer of the Supplement to the Federal Historic Rehabilitation Tax Credit 

For taxable years beginning on or after January 1, 2014, any person, including a nonprofit entity described in section 
501(c)(3) of the Internal Revenue Code, may sell or otherwise transfer the credit, in whole or in part, to another person who 
is subject to the taxes imposed under secs.71.02,71.08 71.23, , or71.43, Wis. Stats., if the person notifies the Department of 
Revenue (DOR) of the transfer, and submits with the notification a copy of the transfer documents, and DOR certifies 
ownership of the credit with each transfer. 
 
The purchaser can first use the credit in the tax year the purchase is completed. For example, a tax credit from the 2020 
tax year is purchased in 2024. The credit can be used by the purchaser in tax year 2024 or later. The purchaser cannot 
amend their tax return to use the credit in 2020, 2021, 2022, or 2023. 
 
If DOR adjusts or disallows, in whole or in part, a credit that has been transferred, only the person who originally 
transferred the credit to another person is liable to repay the adjusted or disallowed amount. 
Credit Certification 
No person may claim the credit without first being certified by  the  Wisconsin  Economic  Development  Corporation 
(WEDC) and including a copy of the certification with their return. WEDC may certify a person to claim the credit if 
WEDC determines that the person is conducting an eligible activity. For certification purposes, the claimant  shall provide  to 
WEDC all the following: 
1.  Evidence that the rehabilitation was recommended by the State Historic Preservation Officer for approval by the Secretary 
   of the Interior under 36 CFR 67.6 before the  physical work of construction, or destruction in preparation  for construction, 
   began and that the rehabilitation was approved by the State Historic Preservation Officer. 
2.  Evidence that the taxpayer obtained written certification from the State Historic Preservation Officer that: 

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                                    2024 Schedule HR-5 Instructions 

o      The property is listed on the National Register of Historic Places in Wisconsin or the State Register of Historic Places, 
       or is determined by the State Historical Society to be eligible for listing on the National Register of Historic Places in 
       Wisconsin or the State Register of Historic Places, or is located in a historic district that is listed in the National 
       Register of Historic Places in Wisconsin or the State Register of Historic Places and is certified by the State Historic 
       Preservation Officer as being of historic significance to the district, or is an outbuilding of an otherwise eligible 
       property certified by the State Historic Preservation Officer as contributing to the historic significance of the property. 
o      The proposed preservation or rehabilitation plan complies with standards promulgated under sec. 44.02 (24), Wis. 
       Stats., and the completed preservation or rehabilitation substantially complies with the proposed plan. 
o      The costs are not incurred to acquire any building or interest in a building or to enlarge an existing building. 
o      The costs were not incurred before the proposed preservation or rehabilitation plan was approved. 
Carryforward of Transferred Credits 
The carryforward period for credits purchased will continue to be the remaining carryforward period of the original holder of 
the credits. For example, if a claimant purchases a supplement to the federal historic rehabilitation tax credit with a 
remaining credit carryforward of 8 years at the time of purchase, the purchaser will also have an 8 year credit carryforward. 
Tax Issues 
The entity transferring the tax credit will be required to recognize a capital gain on the sale of the credit equal to the 
difference between the basis of the tax credit, which would be zero unless the seller previously purchased the tax credit 
for consideration, and the fair market value of consideration received for the credit. The character of the capital gain as 
either short-term or long-term is determined based on the amount of time between the date the seller made the qualifying 
investment and the date the credit is transferred. If the time period is more than one year, it is a long-term capital gain; if 
the time period is one year or less, it is a short-term capital gain. 
 
The entity purchasing the tax credit will recognize capital gain income when the credit is used to offset a Wisconsin 
income tax liability. The capital gain recognized is equal to the difference between the purchaser’s basis in the tax credit, 
which is the fair market value of consideration paid for the tax credit and any transaction costs incurred to acquire the tax 
credit, and the amount of Wisconsin income tax liability satisfied by use of the tax credit. The character of the capital gain 
as either short-term or long-term is determined based on the amount of time between the date the  purchaser  acquired 
the  tax credit  and  the  date  the credit is used to offset the purchaser's Wisconsin income tax liability. If the time period is 
more than one year, it is a long-term capital gain; if the time period is one year or less, it is a short-term capital gain. 
For purposes of determining when the holding period commences, the date the seller made the qualified investment means 
the date the property is placed into service. For example, if a taxpayer placed qualified property into service on September 
16, 2022, long-term capital gain treatment would apply beginning September 17, 2023. 
 
Additional Information 

For more information, you may:  
• Access common questions at: Transfer of Supplement to the Federal Historic Rehabilitation Credit 
• Email your question to: DORFranchise@wisconsin.gov 
• Call (608) 266-2772 [TTY: Call the Wisconsin Telecommunications Relay System at 711, if no answer, dial 1-800-947-
  3529] 
• Send a FAX to (608) 267-0834 
• Write to the Audit Bureau, Wisconsin Department of Revenue, Mail Stop 3-107, PO Box 8906, Madison, WI 53708-
  8906. 
  
                                    Applicable Laws and Rules 
 This document provides statements or interpretations of the following laws and regulations in effect as of the revised 
 date: Chapter 71 Wis. Stats. 

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