Federal, state, and local tax incentives exist for owners of historic properties:
- Federal Historic Preservation Tax Incentives: 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.
- State Historic Preservation Tax Incentives: A state sales tax exemption on labor is available for work to buildings listed in the National Register of Historic Places.
- Local Historic Preservation Tax Incentives: County and local taxing authorities may grant property tax exemptions for buildings with state or local historical designations.
Federal Historic Preservation Tax Incentives
20% Tax Credit
A 20% federal income tax credit is available for the rehabilitation of historic, income-producing buildings that are listed in or determined eligible for listing in the National Register of Historic Places. The Texas Historical Commission, as the State Historic Preservation Office for Texas, works in conjunction with the National Park Service to review proposed work to ensure it complies with the Secretary of the Interior’s Standards for Rehabilitation. Each year, an average of over $85 million is reinvested in the Texas economy from participation in this program (based on certified expenses from 2008-2011).
Learn more about the 20% federal rehabilitation tax credit program.
Learn more about successful rehabilitation tax credit projects:
10% Tax Credit
A 10% federal income tax credit is available for the rehabilitation of non-historic buildings constructed prior to 1936. Non-historic buildings are those that are not listed in the National Register of Historic Places or are considered non-contributing to a listed historic district due to alterations. The building must be rehabilitated for a non-residential use, and a substantial percentage of the external walls and internal structure must remain at project completion. For this program, the Texas Historical Commission and National Park Service ensure that the building qualifies as non-historic but have no role in reviewing the project work. For additional information on the 10% tax credit, please visit the National Park Service website.
Tax Benefits for Historic Preservation Easements
The owner of a historic property who donates a preservation easement to a preservation or conservation organization may be eligible for a federal income tax deduction.
Learn more about preservation covenants and easements.
State Historic Preservation Tax Incentives
The State of Texas offers a sales tax exemption on the labor to repair, restore, or remodel a building listed in the National Register of Historic Places. This exemption does not apply to the purchase of materials. It is available only for non-residential buildings, as labor for work on residential real property is not taxable. This exemption is authorized by Title 34, Section 3.357 (d)(4) of the Texas Administrative Code.
Contact the Texas Comptroller of Public Accounts for information on how to obtain a Texas Sales and Use Tax Exemption Certificate.
Local Historic Preservation Tax Incentives
Properties that are designated as Recorded Texas Historic Landmarks, State Archeological Landmarks, or local landmarks may be eligible for property tax incentives. The local taxing authority must authorize exemptions for historic properties in need of tax relief and will determine the amount of the exemption. Local tax exemptions for historic properties are authorized by Title 1, Section 11.24 of the Texas Tax Code.
Contact your county appraisal district to determine what exemptions are available in your community.
