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A.C.O.R.N. Encourages Neighborhood Preservation Through Its New Historic Tax Credit Service
Typically utilized as a tool for developers for large, commercial renovation projects such as Tobacco Row, historic tax credits can also greatly benefit the individual home owner renovating a historic structure for a residence. A.C.O.R.N. has initiated a Historic Rehabilitation Tax Credit Service to navigate people through the 3 Part application process.
Before and after
Renovate Your Historic Home And Take Earn A Financial Incentive Homeowner Opportunities Through A.C.O.R.N’s Historic Rehabilitation Tax Credit Service
What are Historic Rehabilitation Tax Credits?
Rehabilitation Tax Credits reduce the amount of income taxes owed by taxpayers who rehabilitate qualifying historic buildings. If your renovation meets certain requirements, you may be able to claim 20% of qualified rehabilitation costs as a credit on your federal income taxes and 25% of qualified costs on your state income taxes. That’s a possible savings of up to 45 cents on every dollar you invest in a renovation project. To be eligible for the program, your building must be certified as contributing to a historic district listed on the National Register of Historic Place and the Virginia Landmarks Register or it must be individually listed on these registers. In order to claim the federal tax credit, your building must be income producing. However, the state credit is available for owner-occupied as well as income-producing properties.
How much do you have to spend to qualify?
For the federal program, the rehab costs must exceed your adjusted basis in the building or $5,000, whichever is greater. For the state program, you must spend at least 25% of the assessed value of the building if you plan to live in the building; or, 50% of the assessed value if it is to be used for income-producing purposes. the federal credit may be carried forward for up to 20 years and back for one year on your federal tax return. the state credit may be carried forward for up to 10 years on your state tax returns.
What are eligible rehabilitation expenses?
Generally this includes the cost of work done on the historic structure itself. But in addition to work done to the structural components of the building, you can include architectural and engineering fees, construction period interest and taxes, construction management costs and reasonable developer fees. Also eligible are expenses related to new heating, plumbing and electrical systems as well as expenses related to updating kitchens and bathrooms.
How do I apply for tax credits?
A three part process is required. In Part I of the application, you must certify that the building is historic. The most complex part of the application is Part 2, which shows that your proposed rehabilitation work appears to be consistent with the Secretary of the Interior’s Standards for Historic Rehabilitation. Extensive photographic and written descriptions are required to show how you intend to treat each significant architectural feature of the property. Part 3 certifies that you have completed the work consistent with the Secretary’s Standards.
While there is no required schedule for completing the rehabilitation, the relevant spending level must be reached by a certain time. Typically, this is 24 months. For a reasonable fee, A.C.O.R.N. can help you through the tax credit application process.
A.C.O.R.N. can help:
Tax credits are a powerful incentive for undertaking a renovation project. However, the application process is detailed and time-consuming. And if owners fail to comply with guidelines, they may be denied the credits. This can happen, for instance, if inappropriate materials are used or historically incorrect features installed. For a fee, A.C.O.R.N. can guide you through the process, advise you on your renovation and prepare the application for you.
The Virginia Department of Historic Resources (DHR) administers the tax credit program. Because A.C.O.R.N. consultants work with you and the staff at DHR , they help ensure that the work on your project meets requirements, thus saving you from making costly mistakes. Contact A.C.O.R.N. for more information about its historic tax credit service. Our goal is to encourage more and better quality renovation in Richmond's old neighborhoods.
For more information, or to request an initial consultation, contact:
David Herring
Phone: 804-422-2148
Email: dherring@richmondneighborhoods.org
Click here to open and print a copy of the A.C.O.R.N. Tax Credit Service Agreement
Click here to open and print a copy of the A.C.O.R.N. Fee Schedule
Important Links:
Rehabilitation Tax Credits - Overview
Frequently Asked Questions
National Park Service Preservation Tax Incentives
Standards for Rehabilitation