Historic Tax Credits
Historic tax credits are financial incentives offered by governments to encourage the preservation and rehabilitation of historic buildings. These credits reduce the amount of tax owed by individuals or businesses that invest in restoring or preserving properties that are at least fifty years old and are located in a designated historic district or listed on a historic register. They can be an amazing financial incentive for investors and rehabilitators to begin the restoration of a small town’s downtown, for example.
Here’s a bit more detail
Federal Historic Tax Credit (HTC)
In the United States, the federal government offers a 20% tax credit for the rehabilitation of historic, income-producing buildings. To qualify, the building must be listed on the National Register of Historic Places or located in a registered historic district and be certified as historic.
State Historic Tax Credits
Many U.S. states offer additional tax credits, which can be used in combination with the federal credit. The specifics vary by state, including the percentage of the credit, eligibility requirements, and application process. In addition, some state historic tax credits are transferable, meaning the credits can be sold to other taxpayers who can use them.
Application Process
Property owners usually need to apply for the tax credits before beginning work. The application involves detailed documentation of the building's historic significance and the proposed rehabilitation work. However, you may still apply for relevant tax credits even after the rehabilitation has begun.
Impact
Historic tax credits have been instrumental in revitalizing downtown areas, encouraging the reuse of existing structures, and preserving the architectural heritage of communities. They also often result in economic benefits, such as increased property values and job creation.
