DOWNLOAD OUR GUIDE TO HISTORIC TAX CREDITS HERE.
When you think of a historic building, you probably imagine a structure made of red brick with intricate trim, or perhaps a stone-clad civic building. But did you know that modernist buildings may now considered historic? Read on to learn four more surprising facts about funding capital projects through federal historic tax credits.
1. Buildings from the 1970s may be eligible for historic tax credits.
The Federal Historic Preservation Tax Incentives program applies to a broader group of buildings than one might assume. To be eligible for the program, a building must be listed in the National Register of Historic Places, which generally requires that the building be at least 50 years old. As of 2024, buildings constructed before 1974 may be eligible for listing in the National Register—and thus federal historic tax credits.
We have completed multiple historic tax credit projects involving mid-century modern structures, including The Plaza and Tower on the Maumee apartment buildings. Our extensive knowledge of modern buildings’ architectural and historical context enables us to successfully build a case for listing in the National Register, the first step in establishing their eligibility for tax credits and unlocking additional funding options.
2. The cost of a tax credit rehabilitation must exceed the pre-rehabilitation value of the building.
To qualify for federal historic tax credits, the cost of renovating a historic building must be greater than its value before renovation. The National Park Service, which administers the federal historic tax credit program, determines that this requirement has been met through the substantial rehabilitation test: the cost of the project exceeds $5,000 or the building’s adjusted basis, whichever is greater. This is called the substantial rehabilitation test.
Not all renovation expenses are considered qualified rehabilitation expenditures, or costs that contribute to the amount eligible for historic tax credits. Ineligible costs include appliances, cabinets, carpeting, furniture and window treatments, and landscaping.
3. State and local historic tax credits can stack with federal historic tax credits.
Thirty-seven states have historic tax credit programs. The project requirements, value of historic tax credits, and competition for funding vary by state. The National Trust for Historic Preservation provides a comparison of state historic tax credit programs.
Some localities, like Baltimore, offer local historic tax credits or other incentives for the redevelopment of historic buildings. Ask the local historic preservation office in the project’s vicinity about such programs.
4. Historic tax credit projects can receive sustainability certifications.
It’s a common misconception that historic preservation and sustainable design are incompatible. We know otherwise, having designed several historic building renovations that received historic tax credits and third-party sustainability certifications, including the recently opened Packing House. The key is to design for both historic tax credits and a sustainability certification from the beginning of the project.
In addition to the environmental benefits of certified sustainable buildings, some states offer additional tax incentives for historic tax credit projects that also attain a sustainable certification. For example, Maryland offers an additional 5% tax credit for state historic tax credit projects that are certified LEED Gold.
Want to learn more about federal historic tax credits? Download our guide, "Navigating Historic Tax Credits," here.
