Historic Rehabilitation Tax Credits

Historic Rehabilitation Tax Credits

A rehabilitated historic building sparks surrounding revitalization and strengthens community pride and heritage. Rehabilitating historic structures can often cost more than tearing them down and building new structures. Tax incentives are a vital economic tool to help save these buildings. Department of Commerce studies show the spinoff from revitalization projects creates thousands of jobs annually and stimulate new development and reinvestment in communities.

HOW IT WORKS (in simple terms)

Tax credits are based on the total rehabilitation expenses (design and construction). For example, the total cost of a project is $1,000,000; your project may be eligible for up to $400,000 (40%) in combined state and federal tax credits. This means you may deduct this amount from the federal and state taxes you owe, or you may choose to syndicate (sell) the credit to an entity with substantial tax liabilities (often fortune 500 companies) with the help of a tax credit consultant. At the end of the day, you paid $600,000 for a $1,000,000 project.

AVAILABLE TAX CREITS (for income-producing properties)

Federal: 20%; Massachusetts: 20%; North Carolina: 15%, an additional 5% bonus credit is available in certain counties and for manufacturing or agricultural related uses.

AVAILABLE TAX CREITS (for homeowners in North Carolina)

North Carolina offers a 15% rehabilitation credit to owners of certified historic homes, or homes within the certified historic districts of Raleigh, Greensboro, and Madison.

THE PROCESS

To be eligible for historic tax credits, projects are required to meet stringent criteria and pass reviews at the state and federal levels. Each state has a State Historic Preservation Office (SHPO) that works with the Federal office (the Technical Preservation Services, a division of the National Parks Services, which is under the umbrella of the U.S. Department of the Interior). The application process is divided into three parts with 60-day reviews in between.

Part 1: Evaluation of Significance _ determination that the building contributes to the significance of a registered historic district or a National Register property.

Part 2: Description of Rehabilitation _ the proposed work is evaluated using the Secretary of the Interior’s Standards for Rehabilitation.

Part 3: Certification of Completed Work _ submission of final project photos.

Contact ThoughtCraft Architects to learn how we can help with your tax credit project.