Federal, state, and local tax incentives exist for owners of historic properties. The Federal Historic Preservation Tax Incentives Program includes a 20% income tax credit for the rehabilitation of historic, income-producing buildings and a 10% income tax credit for rehabilitation of non-historic buildings. The new Texas Historic Preservation Tax Credit Program is a 25% tax credit for the rehabilitation of historic buildings.
Additionally, a state sales tax exemption on labor is available for work to buildings listed in the National Register of Historic Places. County and local taxing authorities may grant property tax exemptions for buildings with state or local historical designations.
Historic photo of Dallas Post Office courtesy of 400 North Ervay.
Texas Historic Preservation Tax Credit Program
During the 83rd Legislative Session, the Texas Legislature established a state tax credit for the rehabilitation of historic buildings. The credit is worth 25% of the eligible rehabilitation costs for the project, which must be at least $5,000 in value to qualify. The Texas Historic Preservation Tax Credit Program goes into effect January 1, 2015 for properties placed in service on or after September 1, 2013.
The Texas Historical Commission has adopted new administrative rules for implementation of the Texas Historic Preservation Tax Credit Program as Sections 13.1 - 13.8 of Chapter 13 (Title 13, Part II of the Texas Administrative Code). The Commission also proposed an amendment to these rules to clarify the types of entities that may apply for the credit. The adopted rules and proposed amendment are found below. The amendment was posted to the Texas Register for a thirty-day comment period, now closed.
Texas Project Featured in Journal of Tax Credits
The rehabilitation of the mid-century office building at 211 North Ervay in Dallas was highlighted in the September 2014 issue of the Novogradac Journal of Tax Credits. Threatened by demolition following decades-long vacancy, the building was named by Preservation Dallas to their 2004 list of Most Endangered Historic Places. Rehabilitation of the building was made financially viable through the federal and new state historic rehabilitation tax credits. The article, which details the work performed and the project financing, is available below.