What Are Historic Tax Credits?
Without historic tax credits, Sandvick Architects would not be able to fulfill our mission of revitalizing downtowns and urban neighborhoods (both large and small!) by encouraging reinvestment in our nation's existing building stock.
As Jonathan Sandvick has said, "These buildings are essential for us to save as a matter of ecological, social, and cultural responsibility."
But what exactly are historic tax credits and how do they work?
There are two types of historic tax credits:
Federal Historic Rehabilitation Investment Tax Credits
State Historic Preservation Tax Credits
Who can receive Federal tax credits and how much?
One of the most significant differences between the Federal and State tax credits is that all qualified projects will receive the Federal tax credit. Whereas, applications for the State tax credits are scored competitively based on the projects' physical and economic characteristics.
Federal Tax Credits equal 20% of the Qualified Rehabilitation Expenditures (QREs). The credits are claimed at 4% of QREs annually over 5 years, beginning in the year of project completion.
What are the requirements to receive Federal Tax Credits?
The building must be eligible for listing on the National Register of Historic Places, either individually or as part of a district.
Applies to most buildings over 50 years old.
The building must be without any major prior alterations.
The building must be income-producing. Commercial and rental housing properties are eligible. Whereas, owner-occupied homes are not.
The rehabilitation must be substantial, so minor repairs or improvements typically won't qualify.
QREs include most costs associated with the rehabilitation of the historic building. Does not include acquisition, site work, or new additions outside the existing building envelope.
All work must conform to historical standards, but flexibility for needed changes.
It is VERY important to consult with the State Historic Preservation Office (SHPO) early in the design process.
The building owner must retain ownership of the building for 5 years after the completion of the project.
Who can receive Ohio State Historic Preservation Tax Credits and how much?
$120 million in credits are available annually for the state of Ohio and are distributed in two rounds. Applications are scored competitively based on the projects' physical and economic characteristics. A $10 million maximum credit award can be received per project.
Ohio State Historic Preservation Tax Credits (OHPTC) equal 25% of the Qualified Rehabilitation Expenditures (QREs). The QRE rules for the state tax credits are the same as the Federal tax credit.
What are the requirements to receive Ohio Preservation Tax Credits?
The building must be eligible for listing on the National Register of Historic Places or designated a Historic Property by a Certified Local Government, either individually or as part of a district.
The building cannot be used for a single-family or condominium housing upon completion. Multi-family rental housing and all commercial uses are eligible.
The building must be owned by a non-public entity.
The current building owner is the only one who can apply for credits.
All work must conform to the same historic standards as Federal tax credits and you must consult with the State Historic Preservation Office (SHPO).
For more information on Ohio historic tax credits, visit the Ohio Department of Development.
What is a Historic Conservation Easement?
Historic Conservation Easements also play a huge role in saving historic buildings and in return, revitalizing downtowns. Our existing buildings are one of our greatest storehouses of natural resources, filled with wonderful artistry and history.
Along with historic tax credits, conservation easements also aid Sandvick Architects in being able to fulfill our mission of bringing new life to historic buildings and communities.
A Historic Conservation Easement is when a building owner grants an easement to an eligible non-profit organization that prevents incompatible changes to the historic building and requires ongoing maintenance. In some cases, an owner may be eligible for a Federal income tax reduction based on the value of the historic conservation easement.
What are the Historic Conservation Easement requirements?
(The below list is not exhaustive; additional technical requirements apply.)
An easement must be donated in perpetuity and recorded with the deed.
The easement value must be determined by a qualified appraiser.
The easement holder must be recognized by the IRS as a qualified organization.
Any deduction must be properly vetted and supported by extensive documentation.
For more information on Historic Conservation Easements, visit the National Park Services.