Owners with income producing property such as offices, retail stores, and rental housing may be eligible for a Federal tax credit. Property must be a certified historic structure and the rehabilitation must be certified as consistent with the historic character of the property. In order to be considered a certified historic structure, the property must be listed in the National Register of Historic Places. A building in a National Register listed historic district can be eligible for the tax credit if it is considered a contributing building.
Federal Historic Rehabilitation Tax Credits
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20% Federal Historic Rehabilitation Tax Credit: Owners and some lessees of historic buildings used to produce income may be eligible for a federal income tax credit equal to 20% of their rehabilitation costs under the Tax Reform Act of 1986.
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10% Historic Rehabilitation Tax Credit: This credit, created by the Tax Reform Act of 1986, is available for the rehabilitation of non-historic buildings. Non-historic buildings are defined as buildings constructed before 1936 that are not listed in the National Register. For a building located within the boundaries of a National Register historic district, the National Park Service must certify that it does not contribute to the district. The 10% credit applies only to buildings rehabilitated for non-residential uses. No State Historic Preservation Office or National Park Service review is required for these projects. More information about the 10% federal credit is available on the National Park Service website. The website of the Internal Revenue Service also includes information about the 10% credit.
The federal tax credit reduces the amount of income taxes owed. In general, a dollar of tax credit earned reduces the amount of income taxes owed by one dollar. Each tax situation is different, however, and we advise you to check with a tax specialist to determine how the credits would affect your tax liability.