How to Get Federal Financial Aid to Rehabilitate Historic Buildings
Consider the National Preservation Tax Incentives program., Meet the requirement of the 20% tax credit., Determine whether the property is a “certified historic structure.” A building can be considered a certified historic structure if it meets...
Step-by-Step Guide
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Step 1: Consider the National Preservation Tax Incentives program.
The U.S. government supports historic-building preservation through tax incentives.
The Federal Historic Preservation Tax Incentives program supports the rehabilitation of historic structures of every age, size, shape and style.
The goal of the program is to support rehabilitation of abandoned or underused schools, warehouses, factories, churches, retail stores, apartments, hotels, houses, and offices.
The National Park Service (NPS) and the IRS administer the program in partnership with state historic-preservation offices.
The rehabilitation tax credit can reduce one's federal income tax by 20% of the amount spent in a certified rehabilitation of a certified historic structure.
This is a dollar-for-dollar reduction in taxes.
This program has been used to help preserve more than 40,000 historic properties in the U.S. since
1976. -
Step 2: Meet the requirement of the 20% tax credit.
The 20% tax credit is available only for the rehabilitation of historic and income-producing buildings that have been deemed certified historic structures by the National Park Service.
The income-producing requirement generally precludes use of this credit for owner-occupied, residential properties.
The credit is available to support rehabilitation of income-producing properties used for commercial, industrial, agricultural, or residential purposes.
If a portion of a personal residence is used for business purposes, a homeowner may be able to apply for help with rehabilitation of that portion of the residence. , An owner can request a preliminary determination of historical significance from the National Park Service if the building is not yet listed on the National Register or located in a current historic district.
This request can be made as part of the application for the tax-incentive program by completing Part 1 of the Historic Preservation Certification application.
The application can be found on the National Park Service website. , In order for an owner to receive the 20% tax incentive, the National Park Service must approve the rehabilitation plans and certify the finished project.
A certified rehabilitation means that the rehabilitation is consistent with the historic character of the property and/or the district in which the property is located.
NPS recognizes that buildings will be rehabilitated in a manner that allows for efficient commercial use.
The rehabilitation must not destroy, damage or cover interior or exterior materials or features that give the building its historic significance., It is critical that you photograph all aspects of the interior and exterior of the building before you begin the project and again once the project is completed.
These photographs are an important part of your application and necessary for your project to get final approval. , Before you begin the rehabilitation you should contact your State Historic Preservation Office (SHPO) and discuss your proposed project.
You can either download the Historic Preservation Certification application from the NPS website or request a copy from your SHPO.
Review the application carefully, and submit it in the early stages of your project planning.You should not begin any rehabilitation until the project is formally approved in writing by NPS.
The application has three parts:
Part 1—Evaluation of Significance; Part 2—Description of Rehabilitation; Part 3—Request for Certification of Completed Work.
You will submit the relevant parts of the application at different points in the rehabilitation process., The NPS requires that all applicants pay a fee.
The fees are charged for the NPS review of the proposed project, as set forth in Part 2 of the application, and for review of the completed project, as set forth in Part 3 of the application.
Fees vary and are based on the amount of rehabilitation planned.
You are not required to pay the fee until NPS requests payment.
NPS will not issue its decision until you have paid your fees.
You can access a fee schedule on the NPS website., In addition to the project requirements established by NPS, an applicant must also meet IRS requirements to be eligible for the 20% rehabilitation tax credit.
These requirements include the following:
The building must be depreciable, which means that the building must be used in trade or for the production of income.
The rehabilitation must be substantial, which means that during the two-year period of rehabilitation, the expenditures must exceed the greater of $5,000 or the adjusted basis of the building and its structural components.
The property must be placed in service, which means that the building is presently being used for income-generation purposes.
The expenditures must be considered qualified rehabilitation expenditures.
These expenditures include the cost of work on the building, as well as fees for engineers and architects, site-survey fees, legal expenses, and other construction-related costs.
Qualified rehabilitation expenditures do not include the building of a new addition or the provision of parking lots, sidewalks, landscaping or furnishings. , Once you have received your NPS certification you can apply for your 20% tax credit from the IRS.
You must complete IRS form 3468 for the tax year in which the rehabilitated building was put into service.
If you have not yet received your NPS certification, you must include Part 2 of the submitted application along with your tax filings.
If NPS denies certification of the project, the tax credit will be disallowed. , In order to take full advantage of the IRS tax credit, you must maintain ownership of the building for at least five full years from the time the building was placed in service.
If you sell the building within a year, you are responsible for repaying the entire tax credit.
For properties held more than a year but less than five years, the tax credit is reduced by 20% for each year less than five you hold the property. , Generally only nonprofit organizations and public agencies are eligible to receive historic-preservation grants supported by the federal government or funded through the National Trust Preservation Fund.
While you are able to register as an individual through the federal grant website, you would not be eligible to apply for historic-preservation grants.
If you are a nonprofit organization, a public agency, or a native-American tribal government, you would be eligible to apply for federal preservation grants. , In order to register with the federal grant website, you must first apply for a nine-digit Dun & Bradstreet identification number, known as "DUNS." You can apply for the number in the following ways:
You can call 1-866-705-5711 and register over the phone.
You can register on the Dun & Bradstreet website. , In addition to obtaining a DUNS number, you must also register your organization or agency with the System Award Management.
You can register on the SAM website .
You will be required to provide your organization’s name, the name of the organization’s authorized official, and the organization’s Employer Identification Number (EIN)., Once you have obtained your DUNS number and registered with SAM, you are able to register with Grants.gov.
When you begin the registration process, you will be required to submit your DUNS number.
Once this number has been verified, you will be able to create a username and password for your Grants.gov account.
The registration process is typically completed and approved in one day.
You will be required to change your password every 60 days. , Once you are registered with Grants.gov, you can search the website for potential historical-preservation grants.The website allows you to search by keywords such as "historic preservation" and "building." This search should return open grants that can be used for the rehabilitation of historic buildings.
Once you have identified a list of possible grants, you can review the specific application requirements of each to see whether you are eligible.
Typically the first page of each grant description provides you with an overview of the grant and a specification of who is eligible to apply.
If you meet the eligibility requirements, and the grant provides funding for the type of rehabilitation you're proposing, finish applying for the grant. , The National Endowment for the Humanities (NEH) funds a grant for public agencies or private, nonprofit organizations called the Challenge Grant.
These grants are used to help organizations or agencies secure long-term funding for humanities programs and resources.
While the grant is not specifically for historic preservation, under special circumstances the grant may be used to support construction and renovation projects.Challenge Grant eligibility and program requirements change, so it is important for you to review the requirements regularly to see whether your organization would qualify for funding.
You can review the eligibility requirements on the NEH website by searching for “Challenge Grants.” , The NPS provides matching grants to states for the protection of historic properties.
Some states work with nonprofit organizations or agencies to rehabilitate historic-preservation sites.
If you are interested in applying for a National Park Service grant, you should contact your SHPO and see whether it works with organizations like yours on rehabilitation projects.
You should also search for NPS grants on the Grants.gov website and see whether your project meets the eligibility requirements for grants.
You can find a list of State Historic Preservation Offices on the National Park Service website., The NTPF allows members who are public agencies or nonprofit organizations to apply for NTPF grants that can be used for limited historic-preservation projects.
All applicants must match NTPF grant funds dollar-for-dollar, and the funds cannot be used for construction.
They can be used to hire a preservation architect, a landscape architect, a preservation planner, or a real estate development consultant.
You can review the specific application requirements and apply for a grant on the NTPF website. -
Step 3: Determine whether the property is a “certified historic structure.” A building can be considered a certified historic structure if it meets either of two requirements: if the building is listed individually in the National Register of Historic Places; or if it is located in an area that is a registered historic district and is certified by the National Park Service as contributing to the historic significance of that district.
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Step 4: Comply with the certified-rehabilitation requirements.
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Step 5: Photograph the building.
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Step 6: Apply for the tax incentive program.
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Step 7: Pay the application fees.
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Step 8: Meet IRS requirements.
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Step 9: Claim your tax credit.
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Step 10: Maintain ownership of the rehabilitated building for at least five years.
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Step 11: Determine whether you are eligible to receive a federal grant.
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Step 12: Apply for a DUNS number.
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Step 13: Register with the System Award Management (SAM).
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Step 14: Create a username and password on Grants.gov.
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Step 15: Search for grants.
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Step 16: Consider a Challenge Grant.
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Step 17: Review eligibility for National Park Service grants.
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Step 18: Join the National Trust Preservation Fund.
Detailed Guide
The U.S. government supports historic-building preservation through tax incentives.
The Federal Historic Preservation Tax Incentives program supports the rehabilitation of historic structures of every age, size, shape and style.
The goal of the program is to support rehabilitation of abandoned or underused schools, warehouses, factories, churches, retail stores, apartments, hotels, houses, and offices.
The National Park Service (NPS) and the IRS administer the program in partnership with state historic-preservation offices.
The rehabilitation tax credit can reduce one's federal income tax by 20% of the amount spent in a certified rehabilitation of a certified historic structure.
This is a dollar-for-dollar reduction in taxes.
This program has been used to help preserve more than 40,000 historic properties in the U.S. since
1976.
The 20% tax credit is available only for the rehabilitation of historic and income-producing buildings that have been deemed certified historic structures by the National Park Service.
The income-producing requirement generally precludes use of this credit for owner-occupied, residential properties.
The credit is available to support rehabilitation of income-producing properties used for commercial, industrial, agricultural, or residential purposes.
If a portion of a personal residence is used for business purposes, a homeowner may be able to apply for help with rehabilitation of that portion of the residence. , An owner can request a preliminary determination of historical significance from the National Park Service if the building is not yet listed on the National Register or located in a current historic district.
This request can be made as part of the application for the tax-incentive program by completing Part 1 of the Historic Preservation Certification application.
The application can be found on the National Park Service website. , In order for an owner to receive the 20% tax incentive, the National Park Service must approve the rehabilitation plans and certify the finished project.
A certified rehabilitation means that the rehabilitation is consistent with the historic character of the property and/or the district in which the property is located.
NPS recognizes that buildings will be rehabilitated in a manner that allows for efficient commercial use.
The rehabilitation must not destroy, damage or cover interior or exterior materials or features that give the building its historic significance., It is critical that you photograph all aspects of the interior and exterior of the building before you begin the project and again once the project is completed.
These photographs are an important part of your application and necessary for your project to get final approval. , Before you begin the rehabilitation you should contact your State Historic Preservation Office (SHPO) and discuss your proposed project.
You can either download the Historic Preservation Certification application from the NPS website or request a copy from your SHPO.
Review the application carefully, and submit it in the early stages of your project planning.You should not begin any rehabilitation until the project is formally approved in writing by NPS.
The application has three parts:
Part 1—Evaluation of Significance; Part 2—Description of Rehabilitation; Part 3—Request for Certification of Completed Work.
You will submit the relevant parts of the application at different points in the rehabilitation process., The NPS requires that all applicants pay a fee.
The fees are charged for the NPS review of the proposed project, as set forth in Part 2 of the application, and for review of the completed project, as set forth in Part 3 of the application.
Fees vary and are based on the amount of rehabilitation planned.
You are not required to pay the fee until NPS requests payment.
NPS will not issue its decision until you have paid your fees.
You can access a fee schedule on the NPS website., In addition to the project requirements established by NPS, an applicant must also meet IRS requirements to be eligible for the 20% rehabilitation tax credit.
These requirements include the following:
The building must be depreciable, which means that the building must be used in trade or for the production of income.
The rehabilitation must be substantial, which means that during the two-year period of rehabilitation, the expenditures must exceed the greater of $5,000 or the adjusted basis of the building and its structural components.
The property must be placed in service, which means that the building is presently being used for income-generation purposes.
The expenditures must be considered qualified rehabilitation expenditures.
These expenditures include the cost of work on the building, as well as fees for engineers and architects, site-survey fees, legal expenses, and other construction-related costs.
Qualified rehabilitation expenditures do not include the building of a new addition or the provision of parking lots, sidewalks, landscaping or furnishings. , Once you have received your NPS certification you can apply for your 20% tax credit from the IRS.
You must complete IRS form 3468 for the tax year in which the rehabilitated building was put into service.
If you have not yet received your NPS certification, you must include Part 2 of the submitted application along with your tax filings.
If NPS denies certification of the project, the tax credit will be disallowed. , In order to take full advantage of the IRS tax credit, you must maintain ownership of the building for at least five full years from the time the building was placed in service.
If you sell the building within a year, you are responsible for repaying the entire tax credit.
For properties held more than a year but less than five years, the tax credit is reduced by 20% for each year less than five you hold the property. , Generally only nonprofit organizations and public agencies are eligible to receive historic-preservation grants supported by the federal government or funded through the National Trust Preservation Fund.
While you are able to register as an individual through the federal grant website, you would not be eligible to apply for historic-preservation grants.
If you are a nonprofit organization, a public agency, or a native-American tribal government, you would be eligible to apply for federal preservation grants. , In order to register with the federal grant website, you must first apply for a nine-digit Dun & Bradstreet identification number, known as "DUNS." You can apply for the number in the following ways:
You can call 1-866-705-5711 and register over the phone.
You can register on the Dun & Bradstreet website. , In addition to obtaining a DUNS number, you must also register your organization or agency with the System Award Management.
You can register on the SAM website .
You will be required to provide your organization’s name, the name of the organization’s authorized official, and the organization’s Employer Identification Number (EIN)., Once you have obtained your DUNS number and registered with SAM, you are able to register with Grants.gov.
When you begin the registration process, you will be required to submit your DUNS number.
Once this number has been verified, you will be able to create a username and password for your Grants.gov account.
The registration process is typically completed and approved in one day.
You will be required to change your password every 60 days. , Once you are registered with Grants.gov, you can search the website for potential historical-preservation grants.The website allows you to search by keywords such as "historic preservation" and "building." This search should return open grants that can be used for the rehabilitation of historic buildings.
Once you have identified a list of possible grants, you can review the specific application requirements of each to see whether you are eligible.
Typically the first page of each grant description provides you with an overview of the grant and a specification of who is eligible to apply.
If you meet the eligibility requirements, and the grant provides funding for the type of rehabilitation you're proposing, finish applying for the grant. , The National Endowment for the Humanities (NEH) funds a grant for public agencies or private, nonprofit organizations called the Challenge Grant.
These grants are used to help organizations or agencies secure long-term funding for humanities programs and resources.
While the grant is not specifically for historic preservation, under special circumstances the grant may be used to support construction and renovation projects.Challenge Grant eligibility and program requirements change, so it is important for you to review the requirements regularly to see whether your organization would qualify for funding.
You can review the eligibility requirements on the NEH website by searching for “Challenge Grants.” , The NPS provides matching grants to states for the protection of historic properties.
Some states work with nonprofit organizations or agencies to rehabilitate historic-preservation sites.
If you are interested in applying for a National Park Service grant, you should contact your SHPO and see whether it works with organizations like yours on rehabilitation projects.
You should also search for NPS grants on the Grants.gov website and see whether your project meets the eligibility requirements for grants.
You can find a list of State Historic Preservation Offices on the National Park Service website., The NTPF allows members who are public agencies or nonprofit organizations to apply for NTPF grants that can be used for limited historic-preservation projects.
All applicants must match NTPF grant funds dollar-for-dollar, and the funds cannot be used for construction.
They can be used to hire a preservation architect, a landscape architect, a preservation planner, or a real estate development consultant.
You can review the specific application requirements and apply for a grant on the NTPF website.
About the Author
Peter Rodriguez
Enthusiastic about teaching creative arts techniques through clear, step-by-step guides.
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