Historic Tax Credits

Places matter and sometimes our society is slow to recognize that new isn’t always better.  Our consumerism society always wants the newest thing out there, from technology to houses.  We tend to toss the “old” out and forget about it.

The Office of Cultural Development has recognized that our society has been doing this and that we are in danger of losing our cultural identity.  Our nation is very young in comparison to many others.  Our buildings look like infants next to the structures of Europe.  And yet, they express who we are because they demonstrate who we once were.

Developing a culture is important to our society and for a deeper appreciation of our identity as a nation.  The initiative to save and restore our old buildings and houses has been taken up by the government in the form of tax credits from both federal and state entities.  They hope to “encourage the preservation and continued use of historic buildings by offering economic incentives for their rehabilitation.”

The Louisiana Division of Historic Preservation facilitates these historic rehabilitation tax credit programs: the Federal 20% Historic Rehabilitation Tax Credit Program and the 25% State Commercial Tax Credit Program, both for income-producing buildings.

Over the length of this program many places have been restored and will continue to matter for generations.  This initiative not only provides an avenue to save buildings for aesthetic purposes, but drives economic growth.  These programs create jobs and commercial, residential, and industrial spaces inside of the restored historic buildings.

“A tax credit is a direct, dollar for dollar, reduction in the amount of money a taxpayer must pay in taxes for a given year. For example, if a taxpayer owes $5,000 in taxes to the Internal Revenue Service or Department of Revenue, but has a $3,000 credit, he only pays $2,000. Thus he pockets the $3,000 he would otherwise have to pay in taxes. A credit is much better than a deduction which merely reduces a taxpayer’s income and puts him in a lower tax bracket.”

Without these programs many times investors and business owners would not dream of undertaking the projects of a historic building and would opt for new construction instead. 

Another reason to think about restoring an old building instead of beginning from scratch is the environmental impact of reducing the waste to a landfill.  By restoring a home or old grocery store, instead of tearing it down, one saves tons of debris and discarded building materials from waste. Many do not consider the environmental impact this takes when done multiple times in one city, in cities across America.

It bears repeating that “they don’t build them like they used to”.  One hundred year old homes and buildings were built to last and with restoration and updating for modern uses can last another 100 years.

If you have purchased or inherited an older home or building and are worried about the financial repercussions that may come with renovation, be sure to speak with a trusted expert on historic tax credits that can help you. They may have a solution that can help you renovate what feels like a hopeless project. You may be a part of your very own rags-to-riches project with a history worth sharing. Stay tuned for this upcoming Monday’s post, when we discuss a building in Alexandria that could utilize historic tax credits for renovation!

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