Federal Tax Benefits for Historical Property Owners
The Federal Historic Preservation Tax Incentive Program was instituted to enlist the help of owners in the preservation of their privately owned income-producing historic property. The tax incentive applies to buildings that are national historic landmarks, listed in the National Register, and part of a designated historic district. The Secretary of the Interior maintains standards for each property's rehabilitation.
The tax incentive consists of tax credits that reduce the amount of tax that is owed. For the rehabilitation of certified historic buildings, a twenty percent tax credit is given. For the rehabilitation of a non-historic, non-residential building that was built prior to 1936, the tax credit is ten percent. In order for the credits to be applied, substantial rehabilitation must be made of a building that is income-producing or used in a trade or business.
In addition to the tax incentives above, income and estate tax deductions are provided to those who donate a partial interest in a historic property. Unlike the tax credit criteria that requires the property to be income-producing, the tax deduction can be taken with respect to any certified historic structure. This deduction reduces the amount of the taxpayer's taxable income.
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