ECONOMIC INCENTIVES FOR HISTORIC PRESERVATION
Why Preservation Matters – read more here
Rehabilitating and reusing historic buildings is one of the best ways to create jobs and revitalize the places that matter in your community. In 2013, preservation activities in Texas generated more than $4.6 billion and supported more than 79,000 Texas jobs. Finding a successful business plan is the key to making preservation projects happen. Fortunately, generous tax incentives at the local, state, and federal levels can be combined to offset the costs of historic preservation.
AT THE LOCAL LEVEL
The City of Fort Worth’s Historic Site Tax Exemption allows owners of locally-designated properties to freeze the City’s portion of their property taxes at the pre-improvement rate for up to 15 years for HSE properties and up to 10 years for HC properties. Eligibility for the Tax Exemption requires that an amount equal to or greater than 20% of the assessed valuation of the improvements be spent on rehabilitation.
AT THE STATE LEVEL
The new Texas Historic Preservation Tax Credit is worth 25% of eligible rehabilitation costs and is available for buildings listed in the National Register of Historic Places, as well as Recorded Texas Historic Landmarks and Texas State Antiquities Landmarks. The Texas Historic Preservation Tax Credit Program was established through Texas House Bill 500 during the 83rd Texas Legislative Session and went into effect on January 1, 2015.
Additionally, a state sales tax exemption on labor is available for work on buildings listed in the National Register of Historic Places.
AT THE FEDERAL LEVEL
A 20% income tax credit is available for the rehabilitation of historic, income-producing buildings that are listed in or eligible for the National Register of Historic Places, either as an individual site or contributing to a historic district. The Texas Historical Commission and the National Park Service review the rehabilitation work to ensure that it complies with the Secretary’s Standards for Rehabilitation. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit.
A 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.
Learn more about the federal rehabilitation tax credit program: http://www.nps.gov/tps/tax-incentives.htm
A historic preservation easement is a voluntary legal agreement, typically in the form of a deed, which permanently protects an historic property. Through the easement, a property owner places restrictions on the development of or changes to the historic property, then transfers these restrictions to a preservation or conservation organization. A historic property owner who donates an easement may be eligible for tax benefits, such as a Federal income tax deduction. Easement rules are complex, so property owners interested in the potential tax benefits of an easement donation should consult with their accountant or tax attorney. Learn more here: http://www.nps.gov/tps/tax-incentives/taxdocs/easements-historic-properties.pdf
Technical Preservation Services develops historic preservation standards and guidance on preserving and rehabilitating historic buildings, administers the Federal Historic Preservation Tax Incentives Program for rehabilitating historic buildings, and sets the Secretary of the Interior’s Standards for the Treatment of Historic Properties.
Preservation Briefs provide in-depth information about various aspects of historic preservation.