Tax Incentives for Historic Property Rehabilitations

Every Fall, thrill seekers become fascinated with old houses, wondering if there’s a haunted history. However, for many wise property investors, that history could pay off in a big way. If you’ve had your eye on investing in an older building or property that could turn a huge profit, the federal government is providing an incentive to help revitalize neighborhoods across the country. We are always watchful for tax credits for our clients the Historic Rehabilitation Tax Credit is a scary good deal if your property qualifies. This credit exists only for buildings that are more than 50 years old, and your next project could qualify for it if you meet the right criteria.  

The Historic Rehabilitation Tax Credit began in 1976 and is available to investors wishing to rehab historic buildings. The Secretary of the Interior determines which properties are deemed eligible. If the structure is classified as a “certified historic structure”, the owners may qualify for a 20% income tax credit. The government recognizes that these investments provide jobs and community improvement for important buildings that might either be underutilized or in danger of being destroyed. It’s also one of the most cost-effective ways to re-use properties already in existence.

Offered through the National Park Service, there are approximately 1,200 properties approved for this tax credit each year. Some argue that even more properties could be eligible if not for a pretty common misconception. Buildings don’t need to necessarily be interesting or significant to qualify; they just have to be historic in nature. The general age for such buildings is about 50 years, which means structures from the 1960s are the youngest properties to be considered. The rehab also doesn’t need to be a seven-figure construction project to qualify for this incredibly valuable credit.  

 In order to get started, your building has to be certified as historic or be on the national registry. Local designations won’t work for this because your property must be in the national database. Your project could even be in service and receive the designation. After submitting the application, your project can be approved and underway in as little as two months. One very important note- after completion, you have to maintain ownership for five years to take full advantage of the tax credit.