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How To: Get Historic Tax Credits

How To: Get Historic Tax CreditsLet’s face it, paying to repair a big old house can get expensive. A lot of us roll up our sleeves and end up doing a lot of the work ourselves to help make things more affordable. Doing it yourself can be fun, but for major projects, it’s not always feasible because of the time and skills required.

That’s when historic tax credits can help, which come into play when you e-file your yearly taxes. There isn’t a free money window at the government, but if you know where to look, then there could be money available to make your restoration project a little more affordable. I’ll show you some of the best places to find the funds you need.

Federal Historic Tax Credits

There are two different programs that you can get money from the feds with. Both of these historic tax credits require that the structure be an “income producing building.” These tax credits don’t apply for average homeowners because of the income producing caveat, but things like Bed & Breakfasts, Restaurants, Breweries, Hotels, Offices, and others will qualify.

The 20% Historic Tax Credit

If your building is listed on the national register of historic places or may qualify, then this might be the route you should take. The National Park Service, along with the IRS, will give you a 20% credit for the cost of qualifying expenses incurred toward renovating a historic building.

All the work has to be done according to the Secretary of the Interior’s Standards, which helps protect the building’s historical significance. In addition to the “hard costs” of restoration like framing, plaster, etc., there are “soft costs” which also qualify. These include construction period interest and taxes, architect fees, engineering fees, construction management costs, and others. The rehabilitation must be substantial, exceeding either $5,000 or the adjusted basis of the property, whichever is greater.

The 10% Historic Tax Credit

If your building isn’t special enough to be listed on the National Register of Historic Places, don’t cry. There is still a 10% tax credit available for any old building built before 1936. Sorry post-1936 buildings, the feds say you’re not old enough.

As with the 20% tax credit, this is not for residential buildings and carries almost identical rules, benefits, and regulations as the above program.

You can read a more thorough breakdown of these programs to see if and which you may qualify for here: Historic Preservation Tax Incentives

State Historic Preservation Offices (SHPOs)

I don’t know what state you live in, so to go through them all would take away from my time at the beach this weekend, so I’ll give you this handy list of every SHPO in the country. Just click on your state and you can find the contact info for your state’s SHPO who will know what programs are available in your area.

SHPO Directory

Some states are total losers when it comes to making funds available for historic preservation (Ahem, Florida!) while others are total rock stars and make it easy to get the money your project needs. Pray you live in one of the good states or start packing your stuff and checking Realtor.com for an old house just across the border.

In general, state programs have more funds available. There is less red tape, and less stringent requirements than the federal programs. I would start here to get some restoration dollars.

Certified Local Governments (CLGs)

FEDS and SHPOs and CLGs, oh my! Governments certainly love their acronyms, but CLGs are no joke in helping you find the right folks to get your project funded and done correctly. CLGs are a wealth of local information about workshops, classes, events, funding, and anything else related to historic preservation in your city or town.

You won’t find huge grants to fix your house up, but what you will get is minimal red tape, and lots of personalized attention. You may even find someone helpful enough to guide you through applying for the other larger funding sources.

Check the link here to find the CLGs in your area.

CLG Directory

If none of these work, you may be out of luck for free money to fix up that old building other than to ask rich Aunt Edna. While it may be less paperwork, do you really want her peering at you over Thanksgiving dinner wondering when you’ll pay her back?

Good luck and go get that money!

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5 thoughts on “How To: Get Historic Tax Credits

  1. You left out one valuable program that does apply to homeowners in Florida. In 1992, the Florida state constitution was amended to allow municipalities the option of offering ad valorem tax exemptions on improvements to historic properties. For municipalities that have implemented this program, building owners may earn a 10 year property tax freeze on substantial improvements both for residential and commercial historic properties. It may not provide monies up front, but it can be a nice bonus for doing good preservation work.

    BTW – Florida actually has a very good grant program, too – although the money is only available to non-profits and governments. It used to be one of the biggest grant programs in the nation. Not sure where it stands now.

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