How To Secure Historic Restoration Tax Credits in Virginia

Policymakers in Congress and Virginia have established tax incentives to encourage private investment in the development, rehabilitation, and renewed use of historic buildings and properties.

You or your company may be eligible to utilize these tax credits. In this article, you will find an overview of the most important things that Virginia developers need to know about qualifying for state and federal tax incentives for historic restoration.

Federal Tax Incentives for Historic Restoration

Many developers working on historic projects have utilized the federal tax credit. Since the creation of the tax credit program in 1976, the United States Department of Interior reports that the Federal historic preservation tax incentives have resulted in nearly $132 million in direct private investment into historic structures.

The federal government offers a 20 percent tax credit on qualifying rehabilitative expenses. For expenses to be eligible for the federal historic tax credit, work must be performed on a structure that is listed on the National Register of Historic Places as a certified historic structure. Structures that contribute to a listed district may also qualify for these federal tax incentives.

Virginia Tax Incentives for Historic Restoration

In addition to federal tax incentives, the state of Virginia also has a Historic Rehabilitation Tax Credit program for eligible rehabilitation expenses. According to the Virginia Department of Historic Resources, the state’s Historic Rehabilitation Tax Credit (HRTC) was enacted in 1997. Since the program’s start, $1.7 billion in tax credits has been issued, stimulating $6.8 billion dollars in investment by private parties within the Commonwealth.

Virginia’s HRTC program allows companies and investors to reimburse up to 25 percent of their eligible rehabilitation costs as a state tax write-off. In order to qualify for the Virginia historic restoration tax credit, rehabilitative work must meet one of the following three criteria:

• The property must be listed in the Virginia Landmarks Register or National Register;
• The property must be classified as a contributing structure in a Historic District;
• The property must be certified as eligible for listing.

Navigating Development Tax Credits Can Be Challenging

Developers and investors should explore all applicable federal, state, and local tax incentives. Companies never want to leave money on the table. In some cases, developers may be able to take both state and federal tax credits for work associated with a single project. With a comprehensive understanding of the available historic restoration tax credits and financial incentives, companies can make better decisions.

Get Experienced Legal Help

For a number of different reasons, securing a tax credit for a historic development project can be challenging. It is not always clear whether or not a rehabilitation project is eligible for a historic tax credit. If you have questions or need additional information about these type of tax incentives, it is strongly recommended that you consult with an experienced Virginia tax law attorney for assistance.

If you want more information on this area of law, see our tax law overview.