History, culture and identity are important to communities across the country. In an effort to encourage their preservation while supporting future development efforts, federal, state and local governments offer tax credit or abatement programs. The following summary represents the types of programs that are available.
Federal Program: The Federal Historic Preservation Tax Incentives program encourages private sector investment in the rehabilitation and re-use of historic buildings. It is one of the nation's most successful and cost-effective community revitalization programs. It has leveraged over $62 billion in private investment to preserve 38,000 historic properties since 1976. The National Park Service and the Internal Revenue Service administer the program in partnership with State Historic Preservation Offices. A 20% and 10% credit are available.
Federal 20% Tax Credit: A 20% income tax credit is available for the rehabilitation of historic, income-producing buildings that are determined by the Secretary of the Interior, through the National Park Service, to be “certified historic structures.” The State Historic Preservation Offices and the National Park Service review the rehabilitation work to ensure that it complies with the Secretary’s Standards for Rehabilitation. The Internal Revenue Service defines qualified rehabilitation expenses on which the credit may be taken. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit. Each year, Technical Preservation Services approves approximately 1000 projects, leveraging nearly $4 billion annually in private investment in the rehabilitation of historic buildings across the country.
Federal 10% Tax Credit: The 10% tax credit is available for the rehabilitation of non-historic buildings placed in service before 1936. The building must be rehabilitated for non-residential use. In order to qualify for the tax credit, the rehabilitation must meet three criteria: at least 50% of the existing external walls must remain in place as external walls, at least 75% of the existing external walls must remain in place as either external or internal walls, and at least 75% of the internal structural framework must remain in place. There is no formal review process for rehabilitations of non-historic buildings.
City of Fort Worth Historic Site Tax Exemption: The City of Fort Worth freezes the assessed value of Historic and Cultural Landmark designated property for 10 years for owners who spend an amount equal to 30 percent or more of the pre-renovation assessed value of the improvement on rehabilitation. Owners of Highly Significant Endangered designated property who similarly rehabilitate their property qualify for exemption from City taxes on the improvement and a freeze of the land value for 10 to 15 years.
City of Dallas: The City of Dallas offers tax incentives to property owners completing rehabilitation projects to historic properties (City of Dallas Landmarks or structures in Landmark Districts) administered by the Historic Preservation Program. These incentives consist of tax exemptions for rehabilitation or residential conversions. In order to qualify, property must be designated a City of Dallas Landmark or be a contributing property within a Landmark district.