Tax credits can provide assistance to property owners who are looking to preserve/rehabilitate their historic property. In recent blogs we’ve talked about tax credits for historic preservation offered by Baltimore City, as well as the State of Maryland. This week, we’ll discuss tax credits that are available from the federal government through the National Park Service for historic building preservation.
Federal Tax Credits for Historic Building Preservation
20% Tax Credit
This is a 20% income tax credit for the rehabilitation of historic, income-producing buildings. There are a number of criteria for eligibility for the 20% tax credit, but the chief among them is that the structure be “certified historic” by the National Park Service. Owner-occupied residential properties do not qualify.
Qualified rehabilitation expenses are determined by the IRS, and rehabilitation work must comply with standards set by the Secretary of the Interior.
According to the NPS, “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.”
10% Tax Credit
Even if a building is not “certified historic” by the NPS, it can still be eligible for a 10% tax credit. This tax credit is for rehab of non-historic buildings that were placed in served before 1936. It must not be for residential use. There is no formal review process for the restorations made, but they must meet these criteria:
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.
Tax Benefits for Historic Preservation Easements
Tax benefits may also be available for owners of historic properties who donate to an easement. An easement is essentially when a historic property owner voluntarily places restrictions on developments or changes that can be made to a historic property, and “then transfers these restrictions to a preservation or conservation organization.”
Visit the National Park Service’s website to learn more about these federal tax credits for historic preservation.
About Mahogany, Inc.
Mahogany, Inc. is a general contractor specializing in quality construction for projects across a wide range of industries. Located in southwest Baltimore, we employ 100 persons, and are one of the largest minority owned businesses in the state of Maryland. Make sure to check back with our blog every week for the latest industry related information. For more information, you can contact us at 410.727.0334, or email us. We look forward to hearing from you!