03 Apr Preservation Perspectives column: Historic rehab tax incentives overlooked, underappreciated
Have you ever heard someone in the construction industry bemoan the costs associated with historic rehabilitation? “It would have been cheaper to build it new,” is a common lament. Often, however, money is left on the table, as many are unaware of the preservation tax incentives and how lucrative they can be. Greater still, the quality and thoughtfulness attributed to projects utilizing these incentives means that communities gain projects that add longevity to historic building stock through the use of quality materials and best practices for the repair and retention of historic materials.
Many are often surprised to learn how much they could have saved on their last major renovation. Undoubtedly, the expertise, craftsmanship, extra time, and materials needed to complete historic rehabilitation work can be more significant than new construction, equating to higher costs.
Georgia is particularly fortunate as a state with a 25% historic tax credit and an eight-year pre-rehabilitation tax freeze available to owners of historic properties listed on the National Register. If your building is income-producing, add an additional 20% federal historic tax credit for a total return of 45% on rehabilitation costs. In Savannah, the tax freeze alone can equate to tens of thousands of dollars saved.
What the state and federal governments have said, is yes, we know that it can take more money to renovate historic buildings but, there is value in retaining historic buildings within our communities. In Savannah alone, there are 16 National Register historic districts within which these incentives can apply.
Of course, there is a catch, albeit a logical one. Some basic preservation principles in the form of 10 rules, known as the Secretary’s Standards, must be applied to every project, ensuring that the greatest amount of historic material is retained and that changes made to historic buildings are done sensitively. A voluntary program, participants can receive incentives if willing to self-impose such limitations.
Working within this rubric does equate to projects of greater quality and authenticity. Replacing materials in-kind, for example, means that details that might otherwise be replaced with modern materials remain true to design intent. While it could be simpler to replace plaster with drywall, participants are encouraged to repair, rather than replace, historic materials.
We have all seen small windows inserted into historically larger openings or the effects of hard Portland cement on soft historic brick. The result is less than ideal and more often than not, such insensitive changes lead to shorter life spans for historic buildings.
Through the use of preservation tax incentives, the financial burden of historic rehabilitation is lessened. Further, the use of preservation tax incentives requires historic rehabilitation work be performed with quality and care. In this case, what’s good for the goose is good for the gander. The benefits to both the pocket and the community should not be overlooked or understated but rather embraced and encouraged.
Rebecca Fenwick is a founder and principal of Ethos Preservation. Prior, she worked as a project manager and historic preservationist in the architecture field for five years. She can be reached at [email protected].