Renovating an Old Building? You Could Be Leaving Money on the Table!

The centers of our communities often contain our oldest buildings, which are tempting to repurpose due to their location, but renovation costs can be hard to pin down. Working with an already-built building can be complex, with lots of potential unforeseen challenges hiding behind the plaster. And, as in all construction today, materials and labor remain expensive, and financing costs remain high.

If the property you're interested in is in a historic district (or is itself on the National Register of Historic Places), you should know that the state and federal government set aside hundreds of millions of dollars each year to offset your development costs.

What are historic preservation tax incentives?

To encourage the rehabilitation and re-use of historic buildings that contribute to a historic place, Historic Tax Credit programs provide anywhere from 20%-55% of your qualified expenses in the form of tax credits. The state credit is 25% (35% for "rural" areas - cities under 35,000 or parishes less than 100,000 or even unincorporated areas of any parish), and the federal credit is 20%; the credits may be stacked.

Louisiana Senator Bill Cassidy has re-introduced the HTC-GO Act, which would increase the federal percentage to 30% for small projects, among other expansions - so make sure your representatives in Congress are aware of this bill!

How do I know if my project qualifies?

That depends on if you're talking about federal or state credits. In either case, it must be an income-producing property that you do not live in.

Here's the checklist for the Federal Credits:

For Louisiana State Credits:

• Is the building 50 years old?

• Is it a Nationally Registered Historic Place or located in a National Register Historic District?

  OR

• Is it located in a Louisiana Downtown Development District or a Louisiana Cultural District?

And for both, you must also ask:

• Does it Contribute?

"Contribute" means “does it represent and reinforce the character of the district or period in which is was built?” This is where finding an architect specializing in historic preservation can help you. They can research the structure's history and determine whether the property has a chance of being deemed contributing. We have completed numerous historic tax incentive projects and are happy to help.

Please note, a tax attorney or accountant specializing in such credits would need to advise on tax-related questions.