Historic Preservation Property Tax Exemptions: How Landmark Homes Save on Taxes

Historic Preservation Property Tax Exemptions: How Landmark Homes Save on Taxes

Owning a historic property comes with unique challenges and unique benefits. One of the most significant benefits is the potential for property tax exemptions, freezes, or credits available to owners who maintain the historic character of their buildings. Many states and localities offer these incentives to encourage preservation of historic structures.

Here is how historic preservation tax benefits work and whether your property might qualify.

Types of Historic Preservation Tax Benefits

Assessment Freezes

Some states freeze the assessed value of a historic property for a period of years (typically 5-15 years) after the owner completes a qualifying rehabilitation. This prevents the improved value from increasing your tax bill, even though the rehabilitation makes the property more valuable.

Tax Abatements

Certain jurisdictions offer partial or full property tax abatement for historic properties. The abatement may last for a fixed number of years and may phase out gradually.

Rehabilitation Credits

Tax credits based on the cost of rehabilitating a historic structure. These are different from exemptions because they directly offset tax liability dollar-for-dollar, rather than reducing assessed value.

States With Historic Property Tax Benefits

State	Program	Benefit
Texas	Historic Property Tax Exemption	Assessment freeze for 15 years after substantial rehabilitation
Louisiana	Historic Restoration Tax Abatement	5-year assessment freeze at pre-rehabilitation value
Georgia	Historic Property Tax Freeze	8.5-year assessment freeze after qualified rehabilitation
North Carolina	Historic Rehabilitation Tax Credit	15-30% state income tax credit on rehabilitation costs
Virginia	Historic Rehabilitation Tax Credit	25% state income tax credit on rehabilitation costs
Maryland	Historic Preservation Tax Credit	20% state income tax credit on rehabilitation expenses
Missouri	Historic Preservation Tax Credit	25% state tax credit on qualified rehabilitation expenses
New York	Historic Property Tax Exemption	Local option: can exempt increase in value from rehabilitation
Connecticut	Historic Preservation Tax Credit	25% state tax credit on qualifying rehabilitation expenses
Colorado	Historic Property Tax Credit	State income tax credit for rehabilitation of historic properties

Qualifying for Historic Tax Benefits

Property Must Be Historic

The property must typically be:

• Listed on the National Register of Historic Places, OR
• Located within a National Register Historic District, OR
• Listed on a state or local historic register, OR
• Eligible for listing on the National Register

Work Must Follow Standards

Any rehabilitation work must follow the Secretary of the Interior's Standards for Rehabilitation. These standards ensure that the historic character of the building is preserved. Major alterations that compromise the historic integrity can disqualify the property.

Minimum Investment

Most programs require a minimum investment in rehabilitation. Common thresholds are 25-50% of the assessed value of the building (before rehabilitation) or the adjusted basis of the property.

Federal Historic Tax Credits

In addition to state property tax benefits, the federal government offers:

• 20% Tax Credit: For qualifying rehabilitation of certified historic structures used for income-producing purposes (commercial, rental). The credit must be taken over 5 years.
• These credits do not directly reduce property taxes, but they offset federal income tax liability and can make rehabilitation projects financially viable.

Application Process

1. Determine if your property qualifies. Check with your State Historic Preservation Office (SHPO) to confirm the property's historic status.
2. Plan your rehabilitation. Work with an architect familiar with historic preservation standards.
3. Apply for state and local tax benefits. Submit applications to the relevant state or local agency before beginning work (required in most programs).
4. Complete the rehabilitation. Follow the Secretary of the Interior's Standards.
5. Notify the county assessor. Request that the assessment freeze or abatement be applied.
6. Maintain the property. Failure to maintain the historic character may result in loss of the tax benefit.

Considerations and Trade-offs

• Restrictions on alterations: You may be limited in what changes you can make to the property's exterior and sometimes interior
• Maintenance obligations: Historic properties often require more expensive maintenance using specific materials and methods
• Application complexity: The process involves more documentation and review than standard exemptions
• Time commitment: Approvals can take months, and the rehabilitation itself must meet specific standards

Frequently Asked Questions

Does listing my home as historic increase my property taxes?

Not directly. Listing itself does not trigger a reassessment. However, improvements made to the property could increase its assessed value. Historic tax benefits (assessment freezes) are designed to offset this increase.

Can I get historic tax benefits for my primary residence?

State and local property tax benefits often apply to all types of properties, including primary residences. Federal income tax credits (20%) are limited to income-producing properties, but some states offer credits for owner-occupied historic homes as well.

What if my home is in a historic district but not individually listed?

Properties within a National Register Historic District that contribute to the district's significance typically qualify for the same benefits as individually listed properties.

Check Your Property Tax Savings

Whether you own a historic property or a modern home, our free assessment analyzer identifies all exemptions available to you and checks whether your assessment is accurate.

Check your property now to find all available savings.