Job costing that keeps the historic rehabilitation credit intact
In Rochester, New York, a great deal of the work is rehabilitation of buildings that have been standing for a century. When a job is going for the federal or New York State historic tax credit, the credit is computed on qualified rehabilitation expenditures, and someone has to prove which of your costs qualify. Acquisition, enlargement and site work do not. Interior restoration generally does. If your job cost ledger cannot split the two, it gets reconstructed from invoices a year later, and the number that comes out is always smaller than it should have been. We make the split while the job is open.
On the ground
Downtown Rochester, New York
This city builds inside buildings it already has. That single fact turns cost coding into a tax document, and it is why generic small-business bookkeeping fails here in a way it would not fail somewhere newer.
They didn’t just record transactions and call it a day. They built a custom chart of accounts around how a remodeling company actually runs, did a full catch-up on years of bookkeeping inside QuickBooks Online, and now stay on top of my monthly bookkeeping and payroll. Every step, they broke it down in simple terms instead of burying me in accountant talk.
FinTruction rebuilt the whole thing from the ground up, with real job costing, work in progress, and retainage. They didn’t just hand me reports and disappear; they walked me through my numbers until I understood them.
Sahil and his team handle the bookkeeping and job costing for my painting business. They cleaned up my books and set up integrations that give me accurate, timely job costing with solid weekly data. Reliable, detailed, and genuinely invested in getting the numbers right.
FinTruction is the only bookkeeping team we’ve found that truly understands construction accounting and WIP reporting. They aligned our income and costs across 21 jobs and gave us full, monthly transparency. Fast, accurate, and an indispensable partner.
When I came to FinTruction I had no financial structure. No job costing, no WIP tracking, books behind. They did a full cleanup and rebuilt job costing and WIP tracking in QuickBooks. Now I know what’s billed, what’s owed, and where every job stands.
A couple of minutes from a contractor we support, sharing what working with FinTruction has been like and what changed once their numbers finally made sense.
The credit is calculated on QREs, not on your contract value, and the sorting has to survive review. We set the job up so every dollar lands on the qualifying or non-qualifying side of the line when it is coded, with the backup attached, rather than being argued about after closeout by somebody reading invoices.
Every construction platform claims to have a "QuickBooks integration." Most break the moment your books need to be accurate. Sales tax mismaps, retainage disappears, change orders create duplicates, and job costing reports stop matching project reality. We fix the integration so your software, your books, and your job‑level numbers all tell the same story.
Also work with Foundation, Sage 100, Bill.com, ADP, Gusto, Ramp, and more. See all platforms we integrate →
Rehab is the least predictable work there is. You cannot see behind a plaster wall until you open it, so the estimate is a hypothesis and the real cost arrives in pieces. Job costing has to keep up with discovery, or you find out the job went sideways at the same time everyone else does.
A certified rehabilitation is usually a capital improvement. The punch list, the service call and the tenant fit repair alongside it usually are not. New York gives you a 90 day window to get Form ST-124 from the customer, after which the burden of proof is yours, so the paperwork belongs in the job file rather than in someone's memory.
Multi-year rehabilitations are where underbillings hide, and an underbilling is money you have already spent and not yet asked for. We prepare a monthly work in progress schedule comparing cost to date against the current estimate, calculate earned revenue on percentage of completion, and show over and underbilling by job while there is still time to act on it.
Credit-financed work pays on conditions, not on calendars, and a company can be profitable and still run out of cash waiting on a draw. Our controller services and CFO services cover what you can actually carry across overlapping projects, and what your working capital and bonding position look like to the people deciding.
A general bookkeeper can record transactions. Construction accounting is a different job.
| What you need | Generic local bookkeeper | FinTruction |
|---|---|---|
| Job-level costing | Lumps all jobs into one P&L | Cost codes and margin per project |
| WIP & revenue recognition | Cash-basis, no WIP schedule | Monthly WIP with over/underbilling |
| Retainage tracking | Buried in AR/AP, often missed | Tracked receivable & payable by contract |
| Bonding & lender packages | Not equipped to produce them | Bonding-ready statements and backlog |
| Construction software | QuickBooks set up like a retail shop | QuickBooks + integrations tuned for contractors |
Rochester built itself on optics, imaging and precision manufacturing, and the companies that did it, Eastman Kodak and Bausch and Lomb above all, put up an extraordinary amount of building in the process. Much of that stock is still standing: mill and factory blocks along the Genesee, department store buildings on Main Street, warehouses, schools, churches and institutional halls, most of it built well before the Second World War. The optics and photonics cluster that grew out of that history is still here, and so are the buildings.
That is why so much construction work in this city is rehabilitation rather than greenfield. When a building is on or eligible for the National Register and someone wants to put apartments, offices, labs or a food hall inside it, the numbers usually only work with historic tax credits attached. The Sibley Building on Main Street, listed on the National Register in 1984 and redeveloped as Sibley Square, is the scale example, but the same structure of deal repeats at a fraction of the size across the East End, the High Falls area and the neighborhoods around them.
The second half of the market is institutional. The University of Rochester, its medical center, and Rochester Institute of Technology are among the largest employers in the region, and campus construction here is a steady mixture of new buildings and renovation inside old ones. Institutional owners are exempt organizations, which changes how you buy materials, and their projects frequently carry public funding, which can change how you pay your crews. Neither of those is a construction problem. Both are accounting problems.
Put those together and the Rochester contractor's real difficulty is not finding work. It is that the same company, in the same month, may be running a certified rehabilitation where cost coding determines a tax credit, a campus job where sales tax rules are different, a private commercial job that is straightforwardly taxable, and a residential remodel in Pittsford or Penfield. One chart of accounts has to answer four different questions, and most of the ones we inherit cannot answer any of them.
A certified rehabilitation of a certified historic structure earns a credit equal to 20 percent of qualified rehabilitation expenditures. Since the 2017 tax law that credit is claimed ratably over five years beginning in the year the building is placed in service, and the older 10 percent credit for pre-1936 non-historic buildings was repealed. To qualify, the building has to pass the substantial rehabilitation test: QREs during a 24-month measuring period selected by the owner must exceed the greater of the adjusted basis of the building and its structural components, or 5,000 dollars, with a 60-month period available for phased work under an approved architectural plan.
New York adds a state credit on top of the federal one, at 20 percent of QREs, or 30 percent where the project is placed in service after January 1, 2022 and total QREs do not exceed 2.5 million dollars. The state credit cannot exceed 5 million dollars per structure, the project has to receive the federal credit, and the property generally has to be in a qualifying census tract, with the tract data refreshed each April 1. Beginning with tax year 2026 an affordable housing project meeting the exemption conditions no longer needs to sit in a qualifying tract. Large parts of Rochester fall inside eligible tract, which is why so many downtown deals are built around this credit.
Certification is a three-part application filed with the New York State Historic Preservation Office through the CRIS system, with the National Park Service granting final approval. Part 1 establishes historic significance, Part 2 puts the proposed work up against the Secretary of the Interior Standards for Rehabilitation, and Part 3 requests certification of the completed work. The owner then has to hold the building and maintain it in line with the Standards for five years after completion or face recapture. We are not preservation consultants and we do not decide what the Standards permit. What we do is make sure the cost record supporting Part 3 exists before anyone asks for it, and still exists in year four.
In New York, a capital improvement to real property is not subject to sales tax on the labor, while repair, maintenance and installation services are taxable. Form ST-124, the Certificate of Capital Improvement, is the substantiation, and the timing rule matters: obtain a properly completed certificate from the customer within 90 days of rendering the service and the burden of proof sits with the customer, miss it and the burden is yours. Separately, building materials bought for capital improvement work are taxable to the contractor and recovered in the contract price, except on work for an exempt organization where Form ST-120.1 applies. The combined state and local rate in Monroe County is 8 percent.
Public works under Labor Law Article 8 carry prevailing wage under Section 220, with rates set by trade and locality by the New York State Department of Labor and certified payroll filed each pay period. Labor Law Section 224-a extends prevailing wage to certain privately contracted projects where public funds total at least 30 percent of construction project costs and those costs exceed 5 million dollars, administered through a Public Subsidy Board, so a heavily subsidized rehabilitation deserves a look before you bid it. Separately, Lien Law Article 3-A treats funds received for an improvement to real property as trust assets held for that project's beneficiaries, which is a rule about how money moves between jobs, and therefore a rule your bookkeeping either honors or quietly breaks.
We support contractors across Monroe County and the Finger Lakes, from restoration specialists working certified rehabilitations downtown to the commercial, institutional and residential builders working the suburbs.
Running a Construction Company in Rochester?
Get Your Free AuditA fair question if you already have a bookkeeper, or a CPA who does the return every spring. Here is the honest answer.
Contractors who were behind, off the bank, or heading into an audit. Same work, different trades.
Built From Scratch
"FinTruction set the accounts up properly first, then cleaned up everything I never entered."
Rescue + Monthly
"They built a custom chart of accounts around how a remodeling company actually runs."
Most Rochester contractors do not need new software. They need what they already pay for configured for construction, so the credit basis and the job margin are both visible without keeping a second set of numbers in a spreadsheet.
Most QuickBooks files we inherit were configured for a business that sells products. For a contractor that means jobs are customers, cost codes do not exist, retainage hides inside receivables, and there is nothing anywhere in the file recording whether a cost belongs in a credit basis or a taxable service.
Is your QuickBooks file working against you?
If your project managers already track budgets, commitments and change orders in a construction platform, the office should not be typing it in again. We connect the field system to the accounting so the numbers agree, and so a change order carries its cost and its credit flag from the moment it is written.
One set of numbers that the field and the office both believe.
Once the systems are connected, reporting stops being a history lesson. These are the reports Rochester contractors use to decide what to chase and what to walk away from:
See how we have done this for other contractors in our construction accounting case studies.
The historic rehabilitation credits are not calculated on the contract value. They are calculated on qualified rehabilitation expenditures, or QREs: the costs of work on the existing building and its structural components. The owner claims the credit, but the owner claims it off your numbers. Whoever prepares the certified cost report has to take your job cost detail and sort every dollar into qualifying and non-qualifying. If your cost codes were set up to answer a different question, that sorting happens months after the fact, from invoices, by someone who was never on the site. Every cost that cannot be defended gets dropped, and a dropped cost is a smaller credit.
The exclusions are where Rochester rehab jobs lose credit. Acquisition of the building is not a QRE. Enlargement is not: an addition or new construction beyond the existing footprint and volume falls outside the credit. Site work does not qualify, which sweeps in landscaping, sidewalks, parking areas, paving and most exterior work away from the building envelope. Furnishings, appliances, and personal property that is not a structural component are out. Meanwhile architectural and engineering fees, and construction period interest and taxes tied to the qualifying work, generally do count. This is a fine line, and it is drawn through cost codes most contractors never created.
The federal rehabilitation credit under Internal Revenue Code Section 47 is 20 percent of QREs on a certified historic structure, and since the 2017 tax law it is claimed ratably over five years starting when the building is placed in service. New York adds its own credit on top for commercial properties, at 20 percent of QREs, or 30 percent where the project is placed in service after January 1, 2022 and total QREs do not exceed 2.5 million dollars. The state credit is capped at 5 million dollars per structure, the property generally has to sit in a qualifying census tract, and the project has to receive the federal credit to get the state one. Rochester has a lot of qualifying tract, which is exactly why so much downtown work is structured this way.
It is the threshold that decides whether the building qualifies at all. Within a 24-month measuring period the owner selects, QREs have to exceed the greater of the adjusted basis of the building and its structural components, or 5,000 dollars. A phased project can use a 60-month period under an approved architectural plan. The practical consequence for you is that the test is a race against a clock that is measured in dollars of qualifying spend. If non-qualifying work is sitting inside the same cost codes as qualifying work, nobody can tell where the project actually stands against the test until it is too late to influence it.
Certification runs in three parts through the New York State Historic Preservation Office, submitted in the CRIS system, with the National Park Service issuing the final approval. Part 1 establishes that the building is a certified historic structure. Part 2 describes the proposed work and is reviewed against the Secretary of the Interior Standards for Rehabilitation. Part 3 is the request for certification of completed work, and it is the one that needs your cost detail. There is also a five-year tail: the owner has to hold the building and treat it in line with the Standards for five years after completion, or the credit can be recaptured. Records that were good enough for a closeout are not automatically good enough for year four.
It can, and this is the part contractors get blamed for. Part 2 approval is granted for a described scope reviewed against the Secretary of the Interior Standards. Field conditions then force substitutions: a window profile, a masonry repair method, a mechanical route through a historic ceiling. If the change is not run back through the review, the completed work may not match what was approved when Part 3 is filed. Our job is not to make preservation decisions. It is to make sure every change order carries the approval reference, the cost, and the qualifying or non-qualifying flag at the moment it is written, so the owner and the consultant find out now rather than at certification.
New York taxes the two differently. A capital improvement to real property is not subject to sales tax on the labor portion, while repair, maintenance and installation services are taxable. The proof is Form ST-124, the Certificate of Capital Improvement. If you obtain a properly completed ST-124 from the customer within 90 days of rendering the service, the burden of proving the job was a capital improvement shifts to the customer. Miss the 90 days and it is yours. Separately, materials you buy for capital improvement work are taxable to you and get passed through in the price, unless you are working for an exempt organization and use Form ST-120.1. In Monroe County the combined rate is 8 percent, so on a large rehab the difference is real money.
Sometimes, and the tax credit itself is not what triggers it. Public works under Labor Law Article 8, including City of Rochester, Monroe County and state-funded work, carries prevailing wage under Section 220 with certified payroll filed each pay period. On top of that, Section 224-a extends prevailing wage to certain privately contracted projects where public funds make up at least 30 percent of total construction project costs and those costs exceed 5 million dollars, with a Public Subsidy Board set up to administer it. Rehab projects here are often stacked with grants, subsidized loans and other public assistance, so the funding sources belong in the accounting file, not just the developer drawer.
No. Most of our Rochester clients run a mixed book: some certified rehab work, plenty of ordinary commercial, institutional, industrial and residential jobs. The rehab work is simply the hardest thing on the schedule, so we build the system to carry it. We serve contractors across Monroe, Ontario, Wayne, Livingston and Genesee counties, including Rochester, Brighton, Irondequoit, Greece, Henrietta, Webster, Pittsford, Penfield, Fairport, Victor and Canandaigua. Everything is remote, so you are not paying toward an office you would never walk into.
Start with the free Audit. Send your current accounting file and your last job profitability or WIP report. We will tell you what is wrong with it, what it is costing you, and whether your cost detail on any rehabilitation job would stand up to a certified cost report. No charge and no obligation. After that it is a flat monthly fee based on transaction volume, active jobs and reporting needs, so asking a question does not start a clock. Sahil Ahmad, CPA reviews the work.
FinTruction provides construction accounting across New York State. Select your city below for job costing, WIP and contractor bookkeeping support in your market.
If the credit documentation is already handled and the problem is that the month never closes, we also run day-to-day construction bookkeeping for Rochester contractors: coding, reconciliations, AP and AR, and job-cost entry.
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Send us your current accounting file and your last job profitability report. We will tell you what is wrong with it, what it is costing you, and whether your cost detail on a rehabilitation job would hold up at certification. No charge and no obligation for the Audit.
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