HPC of South Bend and St. Joseph County - Standards Update Draft

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City of South Bend and St. Joseph County Historic Preservation Guidelines 77 For More Information: Financial Incentives For HIstoric Building Owners There are a few incentives for historic building owners . Most such incentives require that the building be listed on the National or State Register of Historic Places . The State of Indiana maintains an easy to use database that you can access to look up the status of your building . Go to that database here. So, that is your first step. If it is listed, then review the information below or the pdf that you can find on resources here . Tax Credits and Grants Tax credits for commercially used properties The federal government encourages re-use of historic structures by offering as incentives tax credits for restoration. Tax credits work like this: 20 percent of what a property owner spends to rehabilitate a historic, income-producing property comes off the bottom line of the taxes paid to the federal government . If you spend $100,000 to restore an old hotel, for example, you pay $20,000 less in federal tax. Rules govern what types of buildings and what kind of work qualifies. It is best to seek the advice of a tax attorney and preservation experts before moving forward with a project . An owner who renovates a qualified historic commercial or residential property following preservation standards may apply for a federal tax credit . To qualify for the Rehabilitation Investment Tax Credit (RITC): • The building must be listed in or eligible for the National Register of Historic Places, either individually or as a contributing structure in a designated historic district . • The property can be a commercial building, a factory, or even an old house—but it must be income-producing, not a private residence . • The project must involve a “substantial rehabilitation,” which means spending more than $10,000 or the property’s adjusted basis, whichever is greater, over a specific period, typically 24 to 60 months . • The renovation work must qualify as a “certified rehabilitation,” meaning that it complies with the Secretary of the Interior’s Standards for Rehabilitation . As a general approach the Standards suggest: –Do not change anything you do not have to change . –If you must change something, make sure it does not alter the significance of the property. –Make changes reversible . –Make repairs with the same materials as those being replaced . • The work must be approved before starting construction . To ensure that proposed work will be approved, before any demolition or renovation work begins, property owners applying for the federal credit should submit plans to the Indiana Division of Historic Preservation and Archaeology (DHPA) . • It is always a best practice to consult your accountant or tax attorney regarding a project . Find out more information about the Tax Credit programs at the Indiana Division of Historic Preservation’s web page—here . Tax credits for owner occupied properties A property owner who rehabilitates a primary residence may qualify for the Indiana Residential Historic Rehabilitation Credit . The incentive allows an owner-occupant to take a credit against state income tax liability equal to 20 percent of “qualified” preservation or rehab expenses . To qualify the following general thresholds must be met: • The property is listed in the Indiana Register of Historic Places either individually or as part of a district . • The project cost must exceed $10,000 and cannot include such items as the cost of enlarging an existing structure, paving, or landscaping . • All work must be approved in advance . To determine what expenses qualify, property owners must submit a preservation or rehabilitation plan to Indiana Division of Historic Preservation and Archaeology . • Work must be completed within a specified period, ranging from two to five years. • If the credit exceeds a homeowner’s state tax liability, the remainder may be carried over for up to 15 years . The residential credit is subject to recapture by the state within five years of the completion—triggered if the homeowner sells the property or completes any additional work that does not meet the DHPA’s standards . • Contact your accountant or tax attorney well in advance . Find our more information about the residential tax credit from the Indiana Division of Historic Preservation and Archaeology web site—here . Financial Incentives For Historic Building Owners DRAFT