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A federal tax program supports renovations of historic buildings.
Prior to 1976, the federal tax code favored demolition of older buildings. With the introduction of the Federal Historic Preservation Tax Incentive program that year, though, that mindset has changed.
Now owners and developers can apply for a tax credit on construction-related expenditures for rehab projects involving historic buildings. With a 20 percent tax break available to developers working on certain rehab projects, the program fosters private sector rehabilitation of historic buildings. In some cases, the financial burden of maintaining a historic property is turned over from the government to a private party.
A rehab project is deemed eligible if the building in question is a National Historic Landmark, listed in the National Register, or contributes to a National Register Historic District. Once a project qualifies, the owner/developer must adhere to 10 basic principles created to preserve the building’s character while allowing for updates. These include minimal change to the building’s defining characteristics, repair rather than replacement of deteriorated historic features, and limits on new additions.
So far, more than 32,000 properties have benefited from the program, which is jointly managed by the National Park Service and the Internal Revenue Service, in partnership with the state historic preservation offices.