Tax Incentives for Historic Homes
THE NATIONAL REGISTER OF HISTORIC PLACES
A listing in the National Register of Historic Places—also known as the National Register—is an honor. It is a recognition by the federal government that a property is important in our nation’s past and worthy of preservation. In the Elmwood Park Historic District, over 78% of the structures contribute to our listing in the National Register. If your home is a contributing property to a Historic District, or is listed individually in the National Register, then you may be eligible to take advantage of tax incentives for the repair and rehabilitation of your historic home.
Imagine that you have found your dream house—an early 1900s Queen Anne with a wide front porch and an enchanting garden. It is a contributing property in the Elmwood Park Historic District, and has a small bronze plaque next to the front door. To keep the math simple in this hypothetical, you were able to purchase it for the amazing price of $100,000 because it needs substantial repairs and rehabilitation.
It needs central heating and air, the original knob and tube wiring needs to be replaced, and the windows were painted shut many years ago. These are formidable challenges, but there are several programs at the State and Local level intended to help you maintain your historic property.
The following are a sample list of the expenses that may be qualified Rehabilitation Expenses:
- preservation and rehabilitation work done to the exterior of a historic structure;
- repair and rehabilitation of historic structural systems;
- energy efficiency measures except insulation in frame walls;
- repairs or installation of heating, air conditioning, or ventilating systems;
- repairs or installation of electrical or plumbing systems exclusive of new electrical appliances and electrical or plumbing fixtures; and
- architectural and engineering fees.
The City of Columbia and Richland County Bailey Bill tax abatement programs allows the owner of a historic structure to only pay property taxes on the pre-rehab value of the property for twenty years. The increased value of the property due to renovations is tax-exempt during that time period. A minimum of 20% of the fair market value of the building must be spent on qualified rehabilitation expenditures. If the value of your early 1900s Queen Anne is $100,000, then it will require $20,000 of rehabilitation costs to qualify for the Bailey Bill. You complete all the projects that were mentioned earlier at a cost of $40,000. Although your property value is $140,000, your property taxes will be based on the $100,000 value for the next two decades.
STATE HISTORIC RENOVATION TAX CREDIT
Taxpayers who rehabilitate their owner-occupied residence may be eligible to subtract 25% of the costs of many expensive repairs and renovations from their state income taxes. For this credit, your must own and live in the building that will be rehabilitated, and it must be listed on the National Register either individually, or as a contributing property to a historic district.
To claim this tax credit, you must spend at least $15,000 on eligible rehabilitation expenses within 36 months. If you complete the $40,000 in renovations costs to your Hypothetical Queen Anne, for example, you would be eligible to deduct $10,000, or 25% of your renovation costs, over a five-year period. Each year, you would subtract $2,000 from your South Carolina State tax returns.
If you are interested in applying for this tax credit, or would like additional information, please contact the State Historic Preservation Office at 803.896.6196.
The City of Columbia’s Planning Staff will be able to help you along in this process, and can be reached at 803.545.3222. If you live in Elmwood Park, you may contact Doreen Roy for information about the program. If you have more general questions about preservations, you may contact Amy Moore
Doreen Roy, Preservation Planner for the Elmwood Park Overlay District
Amy Moore, Principal Preservation Planner for the City of Columbia
Click here for additional information about the City of Columbia’s Preservation staff.