The Tax Reform Act of 1986 allows 20% tax credit for the rehabilitation of historic buildings. The final dollar amount is based on the cost of the rehabilitation; in effect 20% of the rehabilitation costs will be borne by the federal government.
The credit is available to owners of historic commercial, office, industrial or rental residential buildings. Generally speaking, private homes do not qualify. If you own and plan to rehabilitate a building that is listed on the National Register of Historic Places or in a locally certified district, you may qualify for the credit.
All interior and exterior work is eligible for the tax credit. This program essentially covers the entire historic building, inside and out, from top to bottom.
The rehabilitation work must meet federal preservation standards and be approved by the State Historic Preservation Office and the National Park Service. If you need approval from a local historical commission, we recommend that the review be coordinated with the SHPO early in the planning process.
The most direct benefit is the 20% tax credit. This program has also been recognized as an important economic catalyst: it provides jobs, encourages investment, and keeps buildings on the tax rolls. Also, the preservation credit may be used in c onjunction with state and federal rehabilitation grants for housing or façade work.
To get more information and an application for the preservation tax credit, please contact our office or go to our Territorial Map section to find information for the technical program representative for your county.
The SHPO provides technical preservation assistance on appropriate methods to preserve and maintain your historic building and qualify for the tax credit. Please contact the SHPO before plans are drawn and especially before any construction work begins.
The Real Property Tax Exemptions for Historic Properties gives authority to local communities to offer a five-year freeze on increases in assessment that commonly result after an owner has rehabilitated a property. After five years, the increased taxes will be phased in over the next five years, resulting in a ten-year delay before the full impact of the new assessment is felt. Rehabilitation work must be performed on properties designated as local landmarks or located in local historic districts, and work must be approved by the landmarks commission.
The Farmer's Protection and Farm preservation Act allows for an income tax credit equal to 25% of the cost of rehabilitating historic barns. The barn must be income producing, in non-residential use, placed in service before 1936, and work must not materially alter the historic appearance of the structure. For information, contact the State Historic Preservation Office.