March 16, 2025
As a real estate professional, tapping into creative financing solutions is crucial when bringing historic buildings back to life. One particularly valuable resource is the federal Historic Tax Credit (HTC), a powerful yet often underused tool that can significantly enhance the viability of your redevelopment projects.
To qualify for the federal Historic Tax Credit (HTC), a building typically must be at least 50 years old, listed on the National Register of Historic Places, or deemed a contributing structure within a registered historic district. Contrary to popular belief, this isn't limited to ornate Victorian or classic prewar buildings. Structures from the mid-1970s can also qualify, offering broader opportunities for adaptive reuse.
The HTC offers substantial financial incentives, providing a credit equal to 20% of the Qualified Rehabilitation Expenditures (QREs). These QREs encompass costs directly related to restoring the historic structure's interior and exterior, excluding acquisition, new construction additions, and unrelated site improvements.
Developers frequently leverage HTC alongside other credits, such as New Markets Tax Credits (NMTC), Solar Investment Tax Credits, and Low-Income Housing Tax Credits (LIHTC). This stacking of credits can significantly enhance a project's viability, especially in creating or preserving affordable housing.
In New York State, developers benefit even further by pairing federal HTC with the state's own HTC program. Such combinations can drastically reduce the overall financial burden, lowering the need for subsidies or high mortgage financing.
Examples of successful projects utilizing HTCs include the Brooklyn Navy Yard's Building 127, transformed into modern mixed-use space, and the EJ Victory building in Johnson City, a former factory repurposed into mixed-use offices and apartments. Projects like these showcase how HTCs can turn historic structures into vibrant, income-generating spaces that meet contemporary community needs.
Understanding and leveraging the HTC program can provide your clients with creative solutions that preserve community history, enhance sustainability, and maximize financial outcomes.
Disclaimer: The information provided here is for general informational purposes only and should not be considered financial, tax, legal, or insurance advice.
