Historic Preservation Tax Credit

The provision of state tax credits for the encouragement of historic preservation activities was first established as a practice in 1986 by the passage of the Tax Reform Act of 1986.

A substantial state tax credit can therefore be applied for by an individual who owns a building determined to be of substantial historical significance and is putting it to commercial use while improving its integrity in regards to the appreciation of said significance. If the applicable agency determines that a provision is being permissibly applied for, it will grant a state tax credit at a rate of 20%.

As with other aspects of the state tax credit programs administered under the United States, the Federal Historic Preservation Tax Credit Program is administered at a state level, usually by the Preservation Department of the state in question. Building owners who feel that their property entitles them to this kind of state tax credit can make an application to such an agency for consideration.

The preservation office specifically tasked with giving out state tax credits will not have the ability to recognize the building as historic based upon their own findings or evidence presented by the owner, to which end applicants must make sure that the historic significance of their property has already been established. For the purposes of state tax credit policy, several different sources exist for affirming the historic significance of a building.

The main guide available in the United States for this purpose is provided through the National Register of Historic Places, through which every historical building in the country can be found. Such a building may either be found in the text of the National Register, or it may be administered under a specific historical district listed as a whole in the Register.

Further considerations to be made for providing state tax credits through a finding of historical significance consist of the way in which the owner is treating the building. Agencies making this judgment will refer to the Department of the Interior, which provides oversight in the form of the Standards for Rehabilitation and the Guidelines for Restoring Historic Buildings. As an agency of that department, the National Park Service will examine the building in line for a state tax credit.

The need for the building owner to receive state tax credits will be established dependent on the budget for the project being greater than the value which the building can be shown to have for commercial purposes. As to the last point, a historic building eligible for state tax credits must also be in use for a profit-oriented activity.

The restoration of commercially-used buildings in the United States is often made financially feasible through the securing of state tax credits in this way, and building owners can include the costs to be offset as a result of such a provision in their overall budget. The government recommends, however, that owners secure state tax credit approval before beginning the restoration if it is a vital part of their strategy.

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