Over the last year, the Preservation Resource Center (PRC) has produced a large number of high-quality virtual classes and programs, all provided to the community online at no cost. The programs cover a variety of real estate topics such as buying and renovating properties, energy efficiency in buildings, and the local real estate market.
The presentation by Jason Riggs and Nathan Marx of Historic Pro Nola, LLC on Historic Tax Credits and the Restoration Tax Abatement was particularly interesting. Below are the highlights of the program.
Historic Tax Credits and the Restoration Tax Abatement Program
- The federal historic tax credit program is administered by the National Park Service while the state program is administered by the Louisiana State Historic Preservation Office. These programs provide tax credits for properties which are (i) at least 50 years old, (ii) constructed during the period of significance, (iii) in a National Register district or other areas for state credits, and (iv) retain most of their original exterior architectural integrity.
- The federal historic tax credit program provides a 20% credit and the state program provides an additional 20% credit. The credit is based on Qualified Rehabilitation Expenditures, which do not include site work, landscaping, fences, driveways, kitchen cabinets or appliances or new additions.
- The rehabilitation of properties in connection with historic tax credit programs must meet the Secretary of Interior’s Standards for Rehabilitation to ensure historic character is preserved. For the federal credit, the property must be used for income-producing purposes for five years and meet the “substantial rehabilitation” test, meaning the cost of rehabilitation exceeds the adjusted basis of the building. The state program does not have a required holding period and only requires that at least $10,000 be spent on rehabilitation.
- The historic tax credit application process includes three parts: (1) evaluating significance by determining proper location and timing of construction and describing the building’s significance, (2) describing the proposed rehabilitation including photos of character defining features (e.g. balconies, doors, floors, casings, windows and stoops) and what rehabilitation will occur, and (3) proof that all proposed work was completed with photo evidence. Each agency has 30 days to review each part, but Part 1 and Part 2 can be submitted together.
- Companies like Historic Pro Nola can vet a property in advance and issue a preapproval letter to ensure historic tax credits are an option before a buyer purchases a property.
- The Restoration Tax Abatement program allows an owner to freeze property taxes based on pre-improvement value for five years. Qualifying locations include historic districts, Opportunity Zones, downtown development districts and economic development districts. State and local approval is required before a Restoration Tax Abatement contract can be issued. An advance notice must be submitted prior to beginning any work.
Check Out PRC’s Virtual Content on Real Estate Topics
A link to all of PRC’s great free content is below, along with a prior Steeg Law article on state and local incentive programs.