The Historic Preservation Tax Credit program used for restoring historic properties in North Carolina has successfully been reinstated. The tax credit system, which also includes the credit for income-producing properties, phased out at the end of 2014 as part of state tax reform measures taken by North Carolina lawmakers. Since first introduced in 1998, experts estimate that the tax credits have generated $1.4 billion in statewide revenues with each project generating approximately four jobs.
After the tax credits expired in 2014, supporters in Raleigh were not convinced that phasing out the credits was a sustainable decision and worked to resuscitate the program. Members of North Carolina’s Department of Natural and Cultural Resources, which houses the State Historic Preservation Office, began touring the state and visiting locations that shared success stories, such as New Bern, Kinston, and Rocky Mount. New Bern has had more than $3 million invested in historic home projects, while Kinston’s Historic Mitchelltown district is undergoing a renaissance targeting a burgeoning creative class, in part from the assistance of tax credits.
Officials say over 2,400 projects across the state have been helped by the Historic Preservation Tax Credit program, with projects carried out in 90 of North Carolina’s 100 counties. The tax credit program has the ability to bring thousands of dollars in private investment to downtowns, with projects often serving as catalysts for future development along vacant main streets. Development officials agree that vibrant downtowns are important for tourism and future economic development. The program creates an incentive for property owners to rehabilitate property, while preserving the character and architectural elements of the original building. The tax credit can also make a rehabilitation project more economically feasible, since the financials behind the redevelopment of an older building are at times difficult to secure.
Although preservationists rejoiced around the state, the revived program will carry certain changes from the original program. Prior to 2014, the original program matched the federal 20 percent tax credit for restoring income-producing historic properties. It also offered the state tax credit of 30 percent for non-income producing structures that meet certain criteria per The Secretary of the Interior’s Standards for Rehabilitation.
The new system substitutes a tiered system instead of the 20 percent match for income producing historic properties. Under the new system, property owners now receive the following:
- A 15 percent tax credit up to $10 million dollars of qualified restoration expenses;
- A 10 percent for qualified restoration expenses from $10 to $20 million;
- No credit for expenses above $20 million.
The tax credit for non-income producing structures—such as homes—has been cut in half from 30 to 15 percent with a cap at $150,000 worth of eligible rehabilitation expenses, which amounts to a maximum of $22,500 worth of credit.
With the return of the Historic Preservation Tax Credit program, what projects do you envision taking advantage of preservation efforts? Does your city offer tax credits for historic preservation? Share your thoughts and your city's stories in the comments area below.
Credits: Images by Rachel Eberhard. Data linked to sources.