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State official outlines Colorado historic tax credit changes and how Castle Rock owners could benefit
Summary
Sarah Capel of the State Historic Preservation Office presented Colorado’s updated state and federal historic tax credit programs, including HB24 changes that create a refundable residential credit (effective for projects completed on or after Jan. 1, 2027), explained eligibility, caps, and application timing, and offered local technical support to applicants.
Sarah Capel, manager of state and federal historic tax credits at the Colorado State Historic Preservation Office, told the Castle Rock Historic Preservation Board on May 6 that recent state law changes expand how owners and nonprofits can use tax credits for building rehabilitation.
"My name is Sarah Capel, and I manage our state and federal historic tax credits," Capel said. She summarized modifications tied to House Bill 24 and described separate residential and commercial tracks, funding pools and caps, and how the program will operate going forward.
Capel said the program gets $15 million each January split into pools for small and large projects and a housing-specific pool. She described the credit rate as location-dependent — "20 to 35%" of qualified rehabilitation expenditures, with urban projects typically receiving the 20% rate and rural projects up to 35% — and noted a $1,000,000 cap per project per year.
One of Capel’s main points was the change for residential owners: starting Jan. 1, 2027, qualifying residential projects completed after that date may receive a refundable credit rather than only a credit that must be applied against state income tax. Capel illustrated the change: "If they get a credit for $10,000 and if they owe $1,000, the Department of Revenue will automatically deduct that $1,000 from that $10,000, and then the state's gonna write them a check for $9,000." She said the refundable option aims to help owners with little or no state income tax liability.
Capel walked the board through the application process and documentation: projects generally require a Part 1 reservation and a Part 2 issuance, clear before-and-after photos, and proof of qualified rehabilitation expenditures. She warned that if a project closes permitted inspections before filing Part 1 the project could be ineligible. The office offers templates and a courtesy review for applicants and urged staff to flag the tax-credit option to eligible property owners during permit reviews.
The presentation included commercial examples and case studies — from phased facade restorations to adaptive reuse of a church — showing how credits can be combined with grants and federal credits to cover significant portions of a project.
Capel encouraged the board to refer potential applicants to the state office, offered to review local applications, and agreed to supply application forms and slides to staff for distribution.
The board spent substantial time asking procedural questions about local review responsibilities for residential credits, required documentation, and how the refundable mechanism will operate in practice. Capel recommended early coordination with the town’s planning and permitting staff and offered follow-up support.
