Did you know that you could receive a credit on your income taxes if you rehabilitate a historic building?
If your rehabilitation meets certain requirements, you could claim 20 percent of your qualified rehabilitation expenses as a credit on your federal income taxes. And, you could claim 25 percent of your qualified rehabilitation expenses as a credit on your state income taxes. Both the federal and state Rehabilitation Tax Credit Programs could tip the scales in favor of an affordable and profitable rehabilitation of a priceless historic downtown asset.
Most of the buildings in your Main Street district will qualify for the programs. Buildings which are individually listed in the National Register of Historic Places and the Virginia Landmarks Register, or are certified as contributing to a historic district that is listed on these registers, are eligible for the program. In order to claim the federal tax credit, the owner must use the building for income-producing purposes. The state credit is available for owner-occupied, as well as income-producing, properties.
A few other considerations: there is a spending threshold, an absolute minimum expenditure, for both credits. In order to receive the credits, all work must be performed in accordance with The Secretary of the Interior’s Standards of Rehabilitation. The application for the credits is a three-step process that is managed through the Virginia Department of Historic Resources (DHR). DHR provides an Open House every first Friday to assist property owners, architects and investors with the process.