Do You Qualify for Incentives?
You can qualify for tax incentives on historic preservation and on qualifying restoration jobs!
In order to qualify for this program, your building needs to be listed on an individual basis in the National Register of Historic Places, or it should be located in a registered historic district as well as certified by the National Park Service as a contributor to the district’s history.
An income tax credit of 20% can be availed for the rehabilitation of historic, and income generating buildings that are certified as historic structures as per the directions of the Secretary of the Interior with the help of National Park Service. It is the job of the Internal Revenue Service to define qualified rehabilitation expenses on which credit is permissible. The residential properties occupied by owners do not qualify for the federal rehabilitation tax credit scheme.
A tax credit of 10% can be availed for any building constructed prior to 1936 which does not fall under historic structures as per 20% tax credit incentive program. Such property may only be utilized for purposes that are non-residential in nature. However, its use as a hotel premise may fall under commercial category, and not a residential one. For example an old home which is transformed into a bed and breakfast is likely to be accepted.
Unlike credits for federal tax that are elusive for investment properties, many states also provide incentives that are aimed at the preservation of historic homes that are occupied by owners. One needs to confirm this from state historic preservation office.
Oregon has initiated a Special Assessment of Historic Property Program in 1975 which was the country’s first historic preservation tax incentive at a state level. It is administered by the state historic preservation office which is a part of the Oregon Parks and Recreation Department. Special Assessment is a historic preservation tax incentive scheme that locks the assessed value of a property for 10 years. This facilitates the property owner to rejuvenate or enhance the property’s condition without paying additional taxes on the enhanced value of the property until the ten year long benefit period has lapsed. This scheme is most effective when the freeze or lock period is initiated earlier than rehabilitation work which would enhance the property value substantially.
In Seattle, a building or structure may qualify for listing as a historic landmark in case it is older than 25 years, and when the Seattle Landmarks Preservation Board finds it eligible for one or more of the following types:
• It is the location of or may be related closely to a historic event that has substantial impact on community, state or nation.
• It is closely related to the life of a person who is important for the history of the city, state or nation.
• It is related closely to the cultural, political, or economic heritage of the community, state or nation.
• It represents the peculiar visible traits of a type of architecture pattern, period or construction method.
• It represents an exemplary work of a designer or a builder.
• It is an easily identifiable visual landmark of the city or its neighborhood and adds value to its distinctive quality or identity.