Georgia State Income Tax Credit Available for Rehabilitated Historic Properties

By: Paul Burks

For almost a dozen years, Georgia property owners of historic homes have been blessed with a state tax credit program that rewards those with the foresight and determination to complete some basic paperwork. With this substantial state tax credit – in effect a rebate – 25% of the cost incurred on home improvements for a rehabilitated historic residence can be returned to the owner, with a cap of $100,000 on the credit. The Georgia Department of Natural Resources’ Historic Preservation Division (DNR-HPD) and the Georgia Department of Revenue administer this state tax credit. Owners of historic residential and commercial properties who plan to start a substantial rehabilitation are eligible to apply for the credit.

If the home is located in a target area, as defined by the state, the credit may be equal to 30% of rehabilitation expenditures, also capped at $100,000. For any other income producing, certified structure, the credit is 25% of rehabilitation expenditures, with the cap at $300,000. This includes rental residential properties. The credit is a dollar for dollar reduction in taxes owed to the State of Georgia and is meant to serve as an incentive to those who own historic properties and wish to complete a rehabilitation project.

The property must be eligible for or listed in the Georgia Register of Historic Places. To find out if a property qualifies, you can contact the Historic Preservation Division’s National Register specialist at 404-651-5911. Many homes throughout the Virginia-Highland neighborhood are eligible for the credit if the property owner will take the time to do the research and complete the state’s application.

The rehabilitation must meet DNR’s Standards for Rehabilitation. The Department of Natural Resources’ Historic Preservation Division reviews all projects to certify that the project meets their standards.

Every project must meet the substantial rehabilitation test and the applicant must certify to the Department of Natural Resources that this test has been met. The substantial rehabilitation test is met when the qualified rehabilitation expenses exceed the following amounts:

• For an historic home used as a principal residence, the lesser of $25,000 or 50% of the adjusted basis of the building
• For an historic home used as a principal residence in a target area, $5,000
• For any other certified historic structure, the greater of $5,000 or the adjusted basis of the building.

At least 5% of the qualified rehabilitation expenditures must be allocated to work completed to the exterior of the structure. Acquisition costs and costs associated with new construction are not qualified rehabilitation expenses.

If a homeowner wishes to further investigate the possibility of using this tax credit to rehabilitate their home they should contact the DNR at www.georgiashpo.org. Click on Tax Incentives. Contact Carole Moore, Grant & Tax Incentives Coordinator, at 404-651-5566 or [email protected] for more detailed information.

Upon request, HPD will offer technical assistance to rehabilitation tax projects by meeting with individuals at HPD’s office or at the project site to discuss specific rehab issues. HPD encourages early communication with their office.

As for me, I strongly recommend this program to my neighbors in Virginia-Highland. As a resident of the Atkins Park neighborhood, I used the program very successfully on a major rehab of my home in 2007-2009. The tax credit returned to me in succeeding tax years approximately 25% of my costs of repair, a substantial sum of money.

I was able to prepare all of the forms myself, and worked with the excellent and helpful staff of the HPD, as they reviewed my documents and subsequent work. I couldn’t have been more pleased with the results, both to my home and to my tax liability.

If anyone wishes, I would be very glad to provide further information or assistance. Please contact me at [email protected]. This is a terrific program that all of us with eligible homes should not hesitate to consider.