Tax credit lends a helping hand: $1 billion in historic preservation

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COLUMBUS – Ohioans have passed the $1 billion mark in use of a federal income tax credit designed to stimulate private investment in historic properties, according to the Ohio Historic Preservation Office.

The credit encourages owners who renovate income-producing properties listed on the National Register of Historic Places. In exchange for following the Secretary of the Interiors Standards for Rehabilitation, a set of guidelines for renovating historic properties, owners get a break on their federal income taxes.

“Ohio has about 54,000 properties on the National Register, so many owners are eligible for this program, and we actively promote it,” said Martha Raymond, head of the program.

Helping hand. The credit has aided preservation and renovation of more than 900 historic buildings in Ohio since introduced by the federal government in 1976, Raymond said.

Nationwide, it has generated $25 billion in privately funded renovations of historic properties, and more than 29,000 projects have qualified for the credit, she said.

“Older buildings are being thoughtfully preserved and reused, stimulating local economies, while owners are being rewarded for going the extra mile,” said Amost J. Loveday Jr., State Historic Preservation officer. “The credit helps provide affordable housing, stimulate private investment, bring business and customers back downtown, attract tourists and strengthen community pride.”

Examples. One example is Notre Dame Academy in Cleveland. The former school was vacant and severely deteriorated. Renovation was completed in February and it is now used as senior citizen apartments. Prior to the rehabilitation project, demolition was threatened three times. It cost $7.5 million in certified rehabilitation expenses.

Another example is the A.B. Carlson House and Store in Chardon, Ohio. The building was a former general store, community meeting hall and dwelling. It was vacant for many years prior to the rehabilitation. It is now an office and showroom for a local building company. Certified rehabilitation expenses were $40,000.

How it works. If you are planning to rehabilitate an income-producing property that is listed on the National Register of Historic Places or located in a National Register Historic District, you are eligible to apply for a 20 percent federal income tax credit for all expenses related to the rehabilitation.

Before you can claim the tax credit, however, the Internal Revenue Code requires that you meet certain criteria. The building must be a depreciable structure – that is, it should be used in a trade or business, or held as an income-producing property, such as a commercial building or rental residential property.

The cost of the proposed rehabilitation should exceed $5,000 or the adjusted basis of the building and its components, whichever is greater.

The structure then has to be designated a “certified historic structure” and rehabilitation proposed on the structure has to be designated a “certified rehabilitation” by the secretary of the interior.

Rehabilitating buildings. According to Raymond, rehabilitation is the process of returning a property to a state of utility through repair or alteration. Rehabilitation allows owners to make changes to a building, including those that are of contemporary value.

New kitchens, bathrooms and new efficient building systems are all permitted. It also allows for adaptive use of buildings, which is a good way to bring a building that may have once served a specific purpose back to a state of usefulness, Raymond said.

In addition, rehabilitation helps provide better economic returns to the owner. This is achieved by introducing a more contemporary use while retaining character-defining features.

For more information call 614-298-2000.

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