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Tax Breaks
Federal 20% Tax Credit
The Federal Historic Preservation Tax Certification Program is one of the most useful incentives for encouraging the preservation of the state's historic resources. Since 1978, over 200 projects in Washington totally more than $655 million dollars have been completed using the Federal Tax Credit Program. Applications have averaged approximately 15 per year, with total investment per year ranging from several million dollars to more than $60 million.
The program is available for buildings in Washington that are listed in the National Register of Historic Places. To be eligible for this 20 percent credit, National Register properties must be income-producing, which may include uses such as commercial, retail, office, rental residential or industrial.
To qualify for the Historic Preservation Tax Certification Program, a project must be "substantial" and be carried out in accordance with the Secretary of the Interior's Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings. A "substantial" rehabilitation is one in which the amount spent on qualified project work is equal to or greater than the adjusted basis (value) of the building itself.
Technical assistance and application information are available from the state Office of Archaeology and Historic Preservation. The office reviews all applications. Final review and approval is made by the National Park Service in its Washington, D.C. office.
The following is a helpful website which can guide you through many of the specific questions about the Federal Tax Credit Program:
For more information about how the Tax Credit Program is administered in Washington State contact:
Department of Archaeology & Historic Preservation
Stephen Mathison, Restoration Designer
(360) 586-3079
e-mail: Stephen.Mathison@dahp.wa.gov
Special ValuationDuring its 1985 session, the Washington State Legislature determined that as the state approached its centennial year, the preservation of a lasting legacy of historic resources was an important goal. In order to reach this goal, the legislature passed a law that allows a "special valuation" for certain historic properties within the state.
The primary benefit of the law is that during the ten-year special valuation period, property taxes will not reflect substantial improvements made to properties that are eligible for special valuation, and designates a local review board that reviews applications. For example, if a property owner incurs qualified rehabilitation costs that equal at least 25% of the building’s assessed value within a 24-month period prior to application, those qualified costs can be subtracted from the newly assessed value of the property for 10 years. The intent of the legislature was to take away the disincentive of increased property taxes that was created when a property owner substantially improved a property.
While this program was created at the state level, local jurisdictions are required to adopt an ordinance in order to allow property owners to take advantage of the tax deduction. See the state’s Model Historic Preservation Ordinance for specific language on Special Valuation. For further information contact your local jurisdiction to see if they are offering Special Valuation.
- Special Valuation Application
- Special Valuation Application for Removal
- Special Valuation Certification of Approval
- ACHP Rehabiliation Standards
New Market Tax Credit
The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39% of the cost of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period. For more information contact:
Community Development Financial Institution
601 13th Street, NW, Suite 200, South
Washington, DC 20005
Phone: (202) 622-8662
Fax: (202) 622-7754
National Trust Small Deal Fund
The National Trust Small Deal Fund is a partnership between Tax Credit Capital and a subsidiary of National Trust for Historic Preservation designed to help developers of historic properties that generate an equity investment of less than $650,000 (total project costs of approximately $4 million or less). Although the tax credit program has been around for 25 years, and an active and efficient market has evolved for larger deals, there is still a void in the market for smaller projects. The Fund was created in 2002 to fill this void. For more information contact:
National Trust Community
Investment Corporation
John Leith-Tetrault
1785 Massachusetts Ave. NW
Washington, DC 20036
E-mail: john_leith-tetrault@nthp.org
Bank of America Historic Tax Credit Fund
In August 2000, the National Trust for Historic Preservation and the Bank of America entered into a partnership to create an equity fund dedicated solely to investing in historic tax credit projects, known as the Bank of America Historic Tax Credit Fund, LP. Since its inception, the Fund has closed on twelve investments totaling $21.4 million in net historic tax credit equity. Projects in which the Fund invested ranged in both geography and size but reflect a consistent theme: each one rehabilitates a National Register-eligible structure that significantly contributes to the economic vitality and character of the surrounding community.
Managed by The National Trust Community Investment Corp. (NTCIC), a for-profit subsidiary of the National Trust, the Fund's unique investment strategy targets projects with development costs in the range of $4 million to $30 million, eligible for a minimum of $750,000 in tax credits. Types of projects eligible for a Fund equity investment include apartment lofts, office and retail use, mixed-use development and governmental and nonprofit facilities. Thanks to NTCIC's $127 million new markets tax credit allocation, the Fund is also able to offer new markets tax credit equity to qualifying historic tax credit projects in low-income communities. For more information contact:
Bank
of America
Christine Fedukowski: (916) 941-0141
Department of Archaeology & Historic Preservation
1063 South Capitol Way, Suite 106
Olympia WA 98501
Phone: 360-586-3065
Fax: 360-586-3067