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Preservation-focused tax incentive programs exist at the federal, state, and local levels. In general, they counter private and public land-use policies favoring demolition and new construction, while providing financial benefits to building owners who might otherwise feel burdened by preservation projects.
Federal Rehabilitation Tax Credit
The historic rehabilitation tax credit is the nation's largest federal incentive promoting urban and rural revitalization through private investment in reusing historic buildings. The credit allows the owner of a certified historic structure to receive a federal income tax credit equal to 20% of the amount spent on qualified rehabilitation costs. There is also a 10% credit for older, non-historic buildings. Since it was enacted in 1976, the credit has been widely used as an effective tool for transforming vacant and underutilized buildings into safe, decent, and -in many cases - affordable places to live and do business.
State Rehabilitation Tax Credits
More than half the states in the country have enacted laws that afford tax relief to owners of historic buildings - many of which are modeled after the federal rehabilitation tax credit. These incentives may be available for both income and non-income producing properties. Some of the various state tax laws include income tax deductions, a credit or abatement for rehabilitation, a special assessment for property tax, sales tax relief, tax levies, and property tax exemption.
For specific questions about state or federal tax credits, please contact your State Historic Preservation Office or the National Park Service, respectively.
Other available resources
About the Federal Rehabilitation Tax Credit
How Does the Historic Rehabilitation Tax Credit Work?
The Rehab Tax Credit at Work: Knoxville's Historic Tennessee Theatre
Does Your Project Qualify?
Legislative Chronology of the Federal Rehabilitation Tax Credit
Take Action: The Community Restoration and Revitalization Act of 2009
State-Level Incentives
State Rehabilitation Tax Credits
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