Take Credit for Heritage Restorations
For a long time heritage properties suffered from a bum rap. Investors were reluctant to purchase a piece of the past because of the cost of dragging it into the present. Fortunately, in the last few decades, older properties have been rightfully recognized for their beauty and historical value and have become a hot commodity. Yes, there is often work to be done on heritage buildings, but there are also financial incentives for restoring these properties to their former glory. After all, restorations create employment and the finished product is culturally significant, making it a draw for tourism and improving the quality of a neighborhood over all.
In fact, property owners in Maryland can benefit from potential federal, state and local tax credits for improvements and renovations. Maryland is serious about encouraging people to restore historic homes or income-producing buildings. If you don’t live in Maryland don’t worry – the state credits have no residency requirements, making it an equal opportunity investment opportunity. If you have a heritage property outside of Maryland you may still be eligible for the federal program. With all of these incentives, be sure to check the program requirements before starting any work.
Whether you are a home owner or a long-term lease holder of an income producing certified heritage structure, you can apply for a Federal Rehabilitation Tax Credit of up to 20 per cent of a restoration. If your property has not been certified, you can apply to have it certified or take advantage of the 10 percent credit for non-historic, non-residential buildings put in service before 1936. These credits have been used to revitalize buildings that were seriously dilapidated. They can be applied to all kinds of work on the building including, “architectural and engineering fees, site survey fees, legal expenses, development fees, and other construction-related costs”.
In a further effort to encourage folks to restore heritage properties, the Maryland Historical Trust administers the state Heritage Preservation Tax Credit program, which offers Maryland income tax credits for 20 per cent of the qualified capital costs. These credits can be used towards interior and exterior rehabilitation, certain landscaping projects, plumbing and electrical upgrades, architectural fees and more.
In addition, the Maryland Historical Trust offers low-interest rehabilitation loans to people who use the Heritage Preservation Tax Credit Program. This loan can be used to acquire, restore or rehabilitate property making it easier for you to do more with less.
Within Maryland, many counties and municipalities also offer property tax credits and/or a freeze on tax assessments (for up to ten years) to encourage people to rehabilitate historic buildings. Again, these programs apply to homes and income-producing buildings designated as historic buildings.
Although some (but not all) of these incentives require you to maintain ownership of your property for a time in order to enjoy the full tax benefits, you are significantly increasing both the appeal and the value of your home. When it does come time to sell, you will see the fruits of your labor. In the meantime you can enjoy the beauty of your heritage property, knowing that you have helped preserve a piece of history for future generations to enjoy.