When people think of restoring old buildings, often the buildings that first come to mind are historic houses or museum restorations. But in places with historic commercial districts, there are also commercial buildings that warrant preservation and rehabilitation. And while grant funds for renovating privately held properties are pretty slim pickings, for owners and long-term leaseholders of historic income-producing properties, there are financial incentives in the form of state and federal rehabilitation tax credits that exist. For qualifying projects in Virginia, tax credits can offset up to 45% of renovation expenses. So if you have a $100,000 renovation planned, you could get back up to $45,000. Pretty nice return on that investment, right?
To qualify, your property has to be historically designated, either individually or as a contributing resource in a historic district. The renovation has to be planned in advance of construction and pre-approved by state and federal reviewers. It also has to be “substantial” in nature (meeting minimum spending thresholds). Once the project is completed, it has to be certified (again, by state and federal reviewers) to have met the standards and followed the pre-approved plan. Finally, the property must be held by the credit-taking owner for at least five years.
That’s it! Well, the process is pretty straightforward, but working with old buildings often isn’t so cut-and-dried, since every building has a different set of features that make up historic character, and therefore every renovation is custom, not cookie-cutter.
The two buildings highlighted in this post are in the Lexington Historic District, which is listed in both the Virginia Landmarks Register and the National Register of Historic Places. Both are potential candidates for the Rehab Tax Credits program, and both are currently listed for sale through James River Realty. Contact me anytime for more information.