It takes work to preserve a property with a 2-foot lean from the wrecking ball, but historic tax credits can make it more financially feasible, says Melinda Stewart, a local consultant who helps commercial and residential property owners through the rehabilitation process.
“A lot of my projects wouldn’t have been possible without historic tax credits; they would have soon become empty lots,” she says.
Qualifying for historic preservation tax credits can be a complex process, however. Most but not all buildings in a designated historic district probably qualify for credits.
“It could be in the middle of Lafayette Square, and it could be very old, but it might not be the style Lafayette is known for, so it might not be considered a contributor to the district.”
Likewise, qualifying for credits could change the parameters of a project. Renovations that take advantage of credits must be drawn up with a higher level of historic preservation in mind.
The property’s planned use could also affect its eligibility. For instance, the property must be income-producing to qualify for federal historic tax credits, which could cover 20 percent of rehab costs, whereas both income-producing and owner-occupied properties may qualify for the state program, which could earn owners a Missouri tax credit offsetting 25 percent of rehab costs. Properties that are both income-producing and owner-occupied may double up on the credits. The state also offers a credit for owner-occupied properties under the federal Neighborhood Preservation Act. Applications must be submitted during the annual application window; eligible requests then go into a lottery to determine which will receive credits from a finite funding pool.
The process can seem daunting, but real estate agents, architects, and even owners of historic homes working on their own rehabs are great sources of information and advice, says Stewart.
“Everybody loves to talk about their projects. If you stop and ask them, most will be happy to share the good, the bad, and the ugly.”
