state and local tax deductions, public policies and subsidies are not directed to the middle class. Federal historic
tax credits only apply to income producing property.
But state programs can help. One tool is historic tax credits.
Renee Kuhlman, a tax credit specialist with the National
Trust for Historic Preservation in Washington, D.C., said
the number of states with historic tax credits has grown
dramatically in the past 20 years. In 1986, there were
three. By 2004, the number had grown to 24 and by
2016, 34 states had some kind of historic tax credits, with
at least 23 of them offered to residential homeowners to
reduce their state income taxes.
“These programs are great preservation tools,” she said.
“But legislators really like them because they can revitalize their downtowns. They are a true catalyst for that
and they’ve multiplied because people see them working
in nearby states.
“You need to have housing for people to support your
downtowns. That’s often the key to making a successful
revitalization. When people use historic credits to fix up
a house, then other people on the block do the same. It
often has a ‘halo’ effect, regardless of whether the neighbors are getting credits themselves.”
Kuhlman said the state income tax credits can lower the
cost of homeownership and lower renovation costs for
residences that qualify under National Park Service standards and are deemed to be “certified historic structures”
or are part of historic neighborhoods.
“The state tax credit for individuals is one of the few
incentives we have for encouraging the rehab of personal
property,” she said. “The federal government doesn’t do
it. So if it weren’t for states offering income tax breaks for
historic residences, there are very few financial incentives
for owners to maintain their historic properties.”
She said Iowa, Maryland, Missouri and Colorado all have
excellent state historic tax credit programs. Colorado’s was
upgraded in 2015 and gives up to a 25 percent income tax
credit for the first $2 million in qualified rehabilitation
expenses and 20 percent for the remaining qualified costs.
“I like this one because they make sure that 50 percent
of the program goes to smaller, Main Street programs,”
she said. “And while middle-income folks wouldn’t use
$2 million, it could still save them a lot on, say, a $150,000
Historic tax credits can
And in Maryland, she said the state allows local governments to give homeowners property tax abatements for
historic restoration projects for up to 10 years, “which
means they wouldn’t have to pay taxes on the improvements for some time and save money that way.”
In St. Louis, Mo., REALTOR® Eric Friedman said his
state’s historic tax credits program was initially passed
in 1997 “because we have a low-housing-cost market in
St. Louis, but high construction costs.
Courtesy of Michigan Municipal League
Photo by Andy Perkins
Las Vegas, N. M.