Form 3835: California State Historic Rehabilitation Tax Credit (2023)

Form 3835 is the document California taxpayers use to claim the State Historic Rehabilitation Tax Credit, a benefit created to encourage the restoration of historic buildings across the state. It’s issued by the California Franchise Tax Board and applies to individuals, corporations, and pass-through entities that have invested in rehabilitating a certified historic structure and received an allocation of credit through the California Tax Credit Allocation Committee (CTCAC).

Unlike other credits that taxpayers can simply calculate and claim on their own, this one requires prior certification. Before you can even think about filling out Form 3835, your rehabilitation project needs to have gone through the CTCAC application process and received an approved allocation. The form itself is where you report the credit amount you were awarded, calculate how much you can apply against your tax liability for the year, and carry forward any unused portion.

Who Needs to File Form 3835

This form is relevant to a fairly specific group: owners of certified historic structures in California who completed qualified rehabilitation expenditures and secured a credit reservation from CTCAC. That includes individual property owners, partnerships, LLCs, and corporations. If you’re part of a pass-through entity that received an allocation, the credit typically flows through to the individual partners or members, and each of them may need to file their own Form 3835 to claim their share.

It’s worth noting that this credit is separate from the federal historic rehabilitation credit, though many projects pursue both. California’s version has its own eligibility rules, application timeline, and annual funding cap, so having federal certification doesn’t automatically qualify you for the state credit.

When and How the Form Is Used

Form 3835 gets filed alongside your California income tax return for the tax year in which you’re claiming the credit. If your project spans multiple years or generates more credit than you can use in one filing, the form includes sections for tracking and carrying forward unused amounts, since California generally allows this credit to be carried over for a set number of years rather than expiring immediately.

The 2023 version of the form reflects the specific credit allocation cycle and program rules in effect for that tax year, so if you’re working with an allocation certificate issued for 2023, this is the version you want. Using an outdated version could mean missing updated line items or instructions tied to that year’s program administration.

Completing the form involves reporting your CTCAC certification number, the total qualified rehabilitation expenditures, the credit amount allocated to you, and how much of that credit you’re applying this year versus carrying forward. Because the form is an AcroForm, you can fill in the fields digitally using standard PDF software before printing or submitting it, which cuts down on transcription errors compared to handwriting figures on a paper copy.

Taxpayers dealing with other California-specific tax situations, such as net operating losses tied to a disaster or business downturn, might also want to look at Form FTB 3805V, which covers NOL computations and disaster loss limitations for individuals.

If your rehabilitation project involves job creation or falls within an economic redevelopment zone, it’s also worth comparing how other states handle similar incentives. New York, for example, offers programs like the Youth Jobs Program Tax Credit and the Economic Transformation and Facility Redevelopment Program Tax Credit, which target similar goals of revitalization and investment through different mechanisms.

Before submitting Form 3835, double-check that your CTCAC allocation paperwork matches the figures you’re entering, and keep copies of your certification documents with your tax records. The Franchise Tax Board can request supporting documentation for historic rehabilitation credit claims, and having your allocation certificate on hand makes that process straightforward if it comes up.