The Federal Historic Preservation Tax Incentive program works with the private ownership of residential and commercial buildings that bring a bit of history and culture to the cities they grace. These buildings are proudly protected by Congress with tax incentives for their maintenance and restoration so that future generations may enjoy them.
The government offers a tax credit, rather than a tax deduction for the upkeep of historical buildings under the protection code. Unlike a tax deduction, which is subtracted from the tax statement, a tax credit is designed to lower the income tax bill. Congress sets forth a percentage of tax credits for each historical structure but has been known to increase the tax benefits on certified historical buildings when weather conditions or natural disasters have made the restoration process more costly.
The federal government works in conjunction with the Department of the Interior, National Park Service and the State Historic Preservation Office in each state. A 20 percent tax credit is standard procedure for most structures that are deemed certified by the state officers.
A building may earn a certified historic structure status on a case by case evaluation upon submission of a Part 1 application to the State Historic Preservation Office. The designated officials will evaluate the building’s significance and grant a certified standing when it is due. However, historic buildings that are already included on the National Registry of Historic Places may waive the Part 1 application process. To qualify, the structure must meet a “building” definition, to exclude railways, dams, ships, and bridges.
To earn a 20 percent rehabilitation tax credit, the owner of the structure must follow a strict set of guidelines to ensure the original character of the building is not destroyed or replaced. This would include using only approved materials to rehabilitate the interior and exterior of the building to maintain its unique appearance from antiquity. Once the work is completed, a detailed description of the restoration must be filed on Part 2, and only those restorations that have followed the historical rehabilitation guidelines to the letter of the law will be approved for the tax credit.
The National Park Service works closely with the Internal Revenue Service to evaluate the restoration workmanship and grant a tax credit to qualified projects. There is, however, a fee of $250 attached to the application process, except in cases where the projected restoration costs are under $20,000. The application fees are attached to the initial paperwork at registration and again required at the closing of the restoration review.
It is critical to get all the assistance you can before starting your restoration process to ensure that your efforts will be crowned with success. The State Historical Preservation Office has an abundant source of information and guidelines that should be explored before you submit your application fees. To ensure that the work you have planned will be approved and that you are provided with a roadmap to keep the costs down, contact us at www.Steller-Construction.com
