TAX INCENTIVES FOR HISTORIC BUILDINGS
Restoring an historic building
is an exciting and sometimes complex process. It
can also be an expensive undertaking, but the
outcome is usually very rewarding. If you own
historic properties, you will want to know sources
of funding for preserving these buildings. Although
there is not typically money in the form of grants
available for an individuals project, there are TAX
INCENTIVES available to taxpaying owners of
income-producing historic buildings.
Currently, there are NO TAX
INCENTIVES FOR OWNER-OCCUPIED HISTORIC HOMES.
State and Federal tax
incentives are available to taxpayers who own
historic buildings and use them for income-producing
In Alabama, commercial historic
buildings can be assessed for ad valorem purposes at
10% instead of the usual 20%.
application for your historic
building; submit the application, photos, and
location map to the Alabama Historical Commission;
and take the AHC response letter to your tax
assessor for the property tax reduction.
A federal rehabilitation tax
incentive allows a federal income tax credit for 20%
of the amount spent to rehabilitate income-producing
historic buildings. Buildings must be listed in the
National Register of Historic Places and must be
income-producing to the owner. The rehabilitation
costs must be substantial, which means that rehab
expenses exceed the adjusted basis of the property.
The rehabilitation must follow Rehabilitation
Standards that protect the historic character and
historic materials that make up the building. Plans
for the project must be approved ahead of time by
the National Park Service. The Alabama Historical
Commission helps owners through a three-part
application process with the National Park Service.
It is important for owners
interested in this program to read all of the
National Park Service and Internal Revenue Service
requirements. Involving your accountant, architect
and contractor, and the AHC early in the planning
process is highly recommended.
To read more about
the program requirements, visit
Before You Apply for details about
eligibility requirements and IRS regulations. See
The Standards for guidance on the
recommended treatment of historic buildings to
insure a successful tax credit project. See
Application Process for required
documentation and to download fee forms, the
application, and instructions
There is also a 10% federal
income tax credit available for rehabilitating
income-producing buildings built before 1936 but NOT
listed in the National Register. Details about this
program are also available at the National Park
National Park Service Tax Incentives video:
Director Jarvis Discusses the tax incentives
The following information sheets may be downloaded:
Preservation Tax Incentives Fact Sheet
A basic summary of the Alabama property tax reduction
and the federal rehabilitation tax credit program.
Tips for a Successful
Things to consider before beginning
This is required for applications
going to the National Park Service.
Checklist for a
A list of requirements
for each part of the application.