Introduction to

Federal Tax Credits 

for Rehabilitating Historic Buildings

Rowhouses

Do you own a rowhouse located in a historic district?

Does it need to be fixed up?

Will it be used for rental housing or a business?

If you answered YES to all three questions, then you should be aware of a program that offers significant federal tax 

incentives for rehabilitating historic buildings.

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The Program 

Administered by the National Park Service in conjunction 

with State Historic Preservation Offices (SHPO), the 

Federal Historic Preservation Tax Incentives program

offers a 20% federal tax credit for qualified rehabilitation 

expenses. Thousands of property owners across the 

country have already utilized these tax incentives to 

rehabilitate historic rowhouses and similar properties.

Why does this program exist? Recognizing the importance 

of preserving our building heritage and the need to 

encourage the rehabilitation of deteriorated properties, 

Congress created in 1976 federal tax incentives to promote 

historic preservation and community revitalization. These 

tax incentives have successfully spurred the rehabilitation 

of historic structures of every period, size, style, and type.

Tax Credit Basics

In general, a tax credit is a dollar-for-dollar reduction 

in the amount of taxes you owe.

The amount of credit under this program equals 20% 

of the qualifying costs of your rehabilitation.

A project must be “substantial” in that your qualifying 

rehabilitation expenses must exceed the greater of 

$5,000 or the adjusted basis of the building.

Your building needs to be certified as a historic 

structure by the National Park Service.

Rehabilitation work has to meet the Secretary of the 

Interior’s Standards for Rehabilitation as determined 

by the National Park Service.

The process is straight-forward, and the tax savings can 

be significant. For example, a property owner planning a 

project estimated to cost $60,000 could realize a tax credit 

of $12,000 in federal income taxes.

Applicants are encouraged to consult their accountant 

or tax advisor to make sure that this federal tax credit 

is beneficial to them. For additional information visit 

the Historic Preservation Tax Incentives website of the 

National Park Service and click on “IRS Connection.”

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This early 20th century postcard depicts a simple rowhouse form 

common throughout Baltimore. Courtesy of Kilduffs Theatre Index

National Park Service

U.S. Department of the Interior

Technical Preservation Services
First: Does your rowhouse contribute to a historic 

district recognized by the National Park Service? 

The easiest way to determine if your building is located 

within a historic district is to contact your local historic 

district commission, municipal planning office, or State 

Historic Preservation Office (SHPO). Recognized historic 

districts, for purposes of federal tax credits, include 

those listed in the National Register of Historic Places

(maintained by the National Park Service) and certain local 

historic districts that are certified by the National Park 

Service. Over one million buildings are already listed in the 

National Register, either individually or as part of historic 

districts.

If your property is located in one of these districts, it still must 

be designated by the National Park Service as a structure 

that contributes to the historic character of the district and 

thus qualifies as a “certified historic structure.” Not every 

building in a district is contributing. For example, when 

historic districts are designated, they are usually associated 

with a particular time period, such as “mid-1800s to 1935.” 

In this case, a 1950s building would not contribute and would 

not receive a 20% rehabilitation tax credit. Within this same 

district, a late 19th-century building might not contribute 

to the historic character if it was almost completely changed 

in the 1950s. 

You can request the National Park Service to designate your 

building a “certified historic structure” by completing and 

submitting Part 1 of the Historic Preservation Certification 

Application, described on the next page.

Second: Will your rehabilitation be “substantial”? 

The cost of a project must exceed the greater of $5000 or 

the building’s adjusted basis. The following formula will 

help you determine if your project will meet the substantial 

test:

 A - B - C + D = adjusted basis

A = purchase price of the property

B = the cost of the land at the time of purchase

C = depreciation taken for an income-producing property

D = cost of any capital improvements made since purchase

For example, Mr. Smith has owned a rowhouse with two 

apartments for 15 years. He originally purchased the 

property for $150,000, and of that purchase price $40,000 

was attributed to the cost of the land. Over the past 15 years, 

Mr. Smith has depreciated the building for tax purposes by 

a total of $60,000. Two years ago, he replaced the roof at a 

cost of $8000. Mr. Smith’s adjusted basis would be $58,000. 

Since he intends to spend $60,000 to fix a leaking basement 

wall; upgrade the electrical, plumbing and heating/air 

conditioning systems; and improve the bathrooms, the 

rehabilitation would qualify as a substantial project. If he 

completes the application process and receives approval, 

Mr. Smith will be eligible for a 20% credit on the cost of his 

rehabilitation, or a $12,000 credit. 

Some expenses associated with a project may not qualify 

for the tax credit, such as the addition of a new room off the 

back, new kitchen appliances, and landscaping.

Third: How does your project become “certified”?

To qualify for the tax credits you need to complete a 3-

part application. In Part 1 of the application, you present 

information to help the National Park Service determine 

if your building is a “certified historic structure.” In Part 

2, you describe the condition of the building and the 

planned rehabilitation work. The proposed work will be 

evaluated based upon the Secretary of Interior’s Standards 

for Rehabilitation—a set of 10 widely accepted standards 

of practice for historic preservation. Part 3 of the 

application is submitted after completion of the project 

and is used by the National Park Service to certify that 

the project as completed meets the Standards and is a 

“certified rehabilitation.” 

The 3 parts of the application need to be completed 

in order. You will submit 2 copies of each part to your 

SHPO. One copy will be forwarded by the SHPO with a 

recommendation to the National Park Service, which will 

issue the final decision for each part of the application. It 

is especially important to submit Part 2 before beginning 

work, because if your initial project proposal does not meet 

the Standards, you are provided an opportunity to modify 

the plans. 

To learn more about the Standards, visit the National Park 

Service website at www.nps.gov/history/hps/tps/ or contact 

your State Historic Preservation Office (SHPO)

Three Steps 

to Determine if a Project is Eligible for Tax Credits

Loss of historic character: The original finished walls and all 

separations between rooms and hallway have been lost to create an 

open floor plan, causing this project not to qualify for tax credits. 

Photo: NPS files
The Application

The Historic Preservation Certification Application (NPS Form 10-168) consists of 3 parts. This form can be downloaded 

from the web at www.nps.gov/history/hps/tps/tax/.

Part 1 of the application is a request to obtain a determination by the National Park Service that your rowhouse is 

a certified historic structure. You will need to describe the physical appearance of the exterior and interior of the 

rowhouse and provide a brief narrative on its history and significance to the historic district in which it is located. Part 

of this information is likely contained in the National Register Nomination of the district, which should be available 

from your local historic district commission, municipal planning office, or SHPO.

The photo above depicts the 

building for which this fictional 

application was created. 

Photo: J. Parker

Complete these boxes until all 

aspects of your project are fully 

described. Be sure to include 

details like proposed finishes 

(drywall, plaster, etc.) and 

planned methods of repair.

HISTORIC PRESERVATION 

SAMPLE CERTIFICATION APPLICATION –

Property Name PART 1

214 Center Street, City, State 

Property Address

Description of physical appearance: This house is a 2-story brick rowhouse with a side-gable 

roof. There are 3 windows across the 2nd story and two on the first. All windows are wooden with 

2 sashes of 6 glass panes each. The front door is on the left side. The window sills and jack 

arches above the windows are all painted white. All other brick is unpainted. There is a party wall 

on the right side shared with the neighbor, and a very small alley or gap between the houses on 

the left side of the house. Inside, there is a stair hall along the left side of the house. Front to 

back on the right is a parlor, dining room, and kitchen (across the entire back side.) Upstairs are 

2 bedrooms and a bathroom

Date of Construction: 1840s Source of Date: National Register Historic District nomination

Date(s) of Alteration(s): 1950s, 1984

Has building been moved? yes 

 no If so, when? 

Statement of significance: 

This rowhouse is listed as a contributing building to the Alexandria National Historic Landmark 

District. It retains extensive historic materials and the original floorplan is largely intact. It is a nice 

example of a mid-nineteenth century rowhouse in the Mid-Atlantic Region. 

7. Photographs and maps. 

 Attach photographs and maps to application 

HISTORIC PRESERVATION 

SAMPLE CERTIFICATION APPLICATION –

Property Name PART 2

214 Center Street, City, State 

Property Address

5. DETAILED DESCRIPTION OF REHABILITATION / PRESERVATION WORK – Includes site work, new construction, alterations, etc. Complete blocks below.

Number 

1

Architectural feature Masonry Describe work and impact on existing feature: 

Approximate Date of feature 1840s A French drain will be installed at the base of the north wall 

to drain the excess ground water away from the building and 

prevent the water from wicking up the wall. After this 

installation, the mortar joints in the affected area will be 

cleaned out by hand and repointed using a mortar mix 

matching in color and composition to the existing. The joint 

profile will match the existing. 

Describe existing feature and its condition: 

Most of the exterior masonry is in good condition. Near 

the ground on the back side of the building, the mortar 

joints have deteriorated and the brick remains constantly 

damp to a height of 3 feet above grade. 

Photo no. 5, 6, 9, 25 Drawing no Site Plan

Number 

2

Architectural feature Windows Describe work and impact on existing feature: 

Approximate Date of feature 1840s The original windows on the front will be cleaned and 

repainted. All other windows will be replaced with aluminum 

windows with grids to match the 6/6 configuration of the 

originals. Dimensions of the individual parts of the 

replacement windows match the originals except for the 

bottom rails which are 1/8 of an inch wider. 

Describe existing feature and its condition: 

The windows on the front of the rowhouse are original 

and are in good condition. The other windows, on the 

back, have extensive rot and are not salvageable. 

Photo no. 1, 2, 6 - 10, 15 - 18 Drawing no manfctr's dwgs

Number 

3

Architectural feature HVAC Describe work and impact on existing feature: 

Approximate Date of feature n/a A new HVAC system and ducts will be installed. The units 

will be located in the basement (see drawing A1) and will 

utilize the mini-duct system, which allows the air ducts to be 

run in preexisting spaces between floors and walls. No ducts 

will be visible upon project completion.

Describe existing feature and its condition: 

There is currently no central heat or air in this rowhouse. 

Air conditioning was accomplished by window units that 

have been removed and heat was baseboard heating 

units, which will be removed. 

Photo no. 12, 13, 31 -34 Drawing no M1, M2

Number 

4

Architectural feature Roof Describe work and impact on existing feature: 

Approximate Date of feature 1984 The roof will be patched and repaired as needed with 

matching materials. Any patches will be made such that they 

will blend with the existing roof when viewed from the street. 
Part 2 of the application is where you describe the condition of the building prior to rehabilitation and the proposed 

work. Three forms of information are needed: a description or narrative for each main building feature (see sample 

left, below); ample photographs showing the condition and views of the property prior to beginning work (exterior 

and interior as well as the surrounding site); and architectural plans or drawings that include existing floor plans and 

proposed changes. If no work is planned for a major feature (such as windows, roof, 2nd floor plan, etc.), include a 

statement to that effect in the application and still provide photographs.

You are encouraged to submit Parts 1 and 2 during the early planning of the project. This provides the opportunity to 

make changes with minimal inconvenience or additional expense if some aspect of the work is determined not to meet 

the Standards for Rehabilitation.

Part 3 of the application is a Request for Certification of Completed Work. This is a presentation of the finished 

rehabilitation and, once approved by the National Park Service, serves as documentation to the Internal Revenue 

Service that your project is a “certified rehabilitation.” Approval of the Part 3 application is a condition for obtaining 

federal rehabilitation tax credits.

Describing Your Project

Material and information to provide in your application 

include:

• historic district map

• site plan 

• photographs

• floor plans

• elevation drawings (not required for all projects)

On a copy of the historic district map, indicate where your 

building is located. It is usually helpful to include a simple 

sketch or site plan to convey the relationship of your 

rowhouse to other district features such as a neighboring 

alley or courtyard and to show the location of a garage or 

other site features on your property.

Photographs are essential in conveying what the property 

and building looks like prior to your rehabilitation. Think 

of the pictures as providing a “virtual tour” of your 

property. Include pictures showing each exterior side, 

the building’s relationship to surrounding structures, and 

close-ups of such primary exterior features as windows, 

doors, and porches. On the interior, include views of all 

main spaces such as hallways, living room, dining room, 

and bedrooms, and features such as stairs, window trim, 

doors, and fireplaces. Document deteriorated conditions 

such as crumbling brickwork or water stained plaster. 

Number each photograph, and write the building’s address 

and a brief description of the image on the back. Include a 

floor plan (or site plan for exterior photographs) with the 

number of each photograph and an arrow pointing in the 

direction it was taken. Please indicate if the image is pre- or 

post-rehabilitation.

Elevation drawings often will be needed where major 

changes to the exterior of the building are planned. For 

example, a drawing should show the size and design of a 

new porch planned for the rear. Floor plans of the existing 

room layouts are important and, where changes are 

proposed, floor plans showing the new layout are needed 

as well.

Supplemental material may also be helpful in describing 

your project. For example, product literature or a simple 

sketch might best describe a new front door that will replace 

the existing, deteriorated one.

Remember that the SHPO and National Park Service 

reviewers who will be evaluating the application will 

probably be seeing your building for the first time through 

the material you provide. Your application should 

communicate: (a) the appearance of your building prior 

to beginning work; (b) the building’s condition on both 

the interior and the exterior prior to work; and (c) your 

proposed rehabilitation work. 

Photo Documentation

Good quality photos (4 x 6 or larger) are needed. 

If using digital images, print in high-resolution on 

photo quality paper.

Label each photo and reference it in the application. 

In addition, key the picture to the floor plan with a 

number and arrow indicating the direction in which 

it was taken. 

Photo 1, Pre-Rehab

214 Center Street

City, State

Side hall with staircase, 

flaking paint, and failing 

plaster, looking toward 

rear of house. 

 Photo: NPS files

Example: Photo and Label
General Advice

The application process works best when you submit Parts 1 & 2 early, before you begin work.

Project approval is made only by the National Park Service.

The National Park Service does not provide blanket pre-approvals for products or techniques, nor does it 

certify contractors.

Photographs are the best descriptive tool–you can never submit too many.

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Rowhouses & Rehab

The goal of the Federal Historic Preservation Tax Incentives 

program is to encourage the retention and re-use of historic 

structures, like rowhouses, while preserving their historic 

character. By definition a rowhouse is a dwelling that is 

attached on one or more sides to another, typically similar, 

dwelling. In its most common form, the rowhouse is a 

single-family residence, although in some neighborhood 

buildings the first floor served a commercial use, such as 

a grocery store. Some were also built with two or more 

housing units. Historically the floor plans of rowhouses 

often had a side access hallway that often ran the length of 

the house with an open, somewhat decorative stair along 

one of the shared walls. A double parlor or a single living 

room tended to be in front, facing the street, followed by the 

dining room. Usually the kitchen was located at the back, 

or sometimes below in a partially below-ground basement. 

Bedrooms were typically located on upper floors.

It is these characteristics, along with particular stylistic 

elements and original materials, that help make rowhouses 

historic and should be retained in a rehabilitation. Sound 

original materials that make up the walls, windows, and 

floors are also important elements that should be retained 

whenever possible. Keep in mind that rowhouses were 

often designed as a group, either matching exactly or 

simply related in style to neighboring structures. Historic 

elements that relate your structure to the rest of the row 

should be preserved.

On the interior, it is important to maintain the sense of 

space and room relationships in the public areas, such as 

the entry and parlor(s) or dining room. Rehabilitation, by 

definition, allows a building to be changed to accommodate 

a new use, but alterations should be made sensitively. 

Changing the use of a rowhouse, either from residential to 

commercial or from single-family to multiple apartments, 

may require creative thinking to accommodate new 

needs without compromising the historic character. 

While altering a floor plan may be necessary, there is 

usually a sensitive way to accomplish this task. First, 

rank your spaces in order of importance—taking 

into consideration previous alterations or significant 

deterioration. In general, the most significant spaces 

in a rowhouse are the entry and stair hall, and the first 

and second rooms on the main living floor. Then, when 

laying out your new floor plan, make every effort to 

avoid re-configuring these rooms. 

These drawings demonstrate how a single-family rowhouse can be turned into apartments while maintaining the historic character of the 

building. The pre-rehabilitation plans have several doors that open to the hallways. To create adequate separation, doorways need to be 

sealed. However, historic doors and trim can be left in place while the openings are sealed behind the door. From the hallways, it would 

appear that the doors are simply closed. Note that while room use may have changed throughout the house, the only changes to the 

historic floor plan were behind the stair on the 1st floor and in the bathroom on the 2nd. Drawings by J. Parker.

Pre-Rehabilitation Plans Proposed Floor Plans
Is a tax credit different from a deduction?

Yes. A tax credit usually saves you more in income tax. Unlike a 

deduction, which reduces taxable income, a credit is a dollarfor-dollar reduction in the amount of taxes you owe.

Can I receive tax credits for fixing up my personal residence?

In general, federal tax credits are not available for rehabilitating 

your personal home. However, some states offer a similar 

state tax credit for homeowners. Contact your State Historic 

Preservation Office (SHPO) to determine the availability of 

these incentives.

Can I expand my building and still qualify for the tax credit?

Yes. However, plans for the expansion must be approved as 

part of the overall rehabilitation; costs associated with this 

new construction do not count toward the credit calculations. 

If you are planning an expansion or addition, visit the National 

Park Service web site at www.nps.gov/history/hps/tps/tax/ for 

guidance on appropriate treatments.

If I have already begun my project, is it too late to get

the credit?

As long as your building is in a registered historic district and 

you submit Part 1 of the application prior to completing the 

project, then you may apply for the tax credits. However, you 

are strongly encouraged to submit rehabilitation plans (Part 

2 of the application) prior to construction. In so doing, you 

ensure that any required changes are identified early and the 

resulting costs and inconvenience are minimized.

Can I change how I use my building?

Yes. A historic building modified to serve a new incomeproducing purpose can be eligible for tax credits. However, the 

new function must be compatible with the historic structure. 

Primary interior spaces and significant building features still 

should be preserved when accommodating a new use of a 

historic structure.

Can anyone help me through this process?

Help is available through a variety of resources. SHPOs and 

local historic preservation organizations are the best place 

to begin if you have questions. Advice is available on the 

National Park Service web site (www.nps.gov/history/hps/tps/ )

or through many SHPO web sites. Some people choose to hire 

a professional consultant, but for simple projects, many 

property owners complete the process themselves.

How long does it take to get approval of my 

proposed project? 

You should submit your rehabilitation plans (Part 2 of the 

application) well in advance of beginning work–many states 

recommend six months prior–to allow time if additional 

information is needed by the SHPO or National Park Service. 

When original submittals contain sufficient information, then 

reviews by the National Park Service are generally completed 

in 30 days once received from the SHPO. 

When can I claim the tax credit?

A credit may usually be claimed in the same year the building 

is placed in service. Where the building is never out of service, 

the credit is usually taken in the year in which the rehabilitation 

is completed and you submit your Request for Certification of 

Completed Work (Part 3 of the application.)

Do I need to have my project reviewed by the National Park 

Service if I already have approval from my local historic 

district review commission?

Yes. National Park Service review is separate from that of a 

local historic district review commission (board of architectural 

review.)

How are the Federal and local reviews different?

Local commissions develop their own guidelines that are 

particular to the district and the community’s preservation 

goals. Under the Federal tax credit program, the Secretary of 

Interior’s Standards for Rehabilitation are applied uniformly 

to projects from across the country. Work on both the exterior 

and the interior of a building is reviewed in accordance 

with the Standards. Local review commissions generally only 

consider exterior work.

Are there any application fees?

It depends on the cost of your project. For information on 

current fees, visit our web address.

How can I learn more about Historic Rehabilitation 

Tax Credits?

Go online to the National Park Service web site at 

www.nps.gov/history/hps/tps/tax/ or contact your State Historic 

Preservation Office for printed material.

To locate your State Historic Preservation Office visit www.ncshpo.org

This booklet was prepared by Jennifer C. Parker, Technical Preservation Services Branch, Heritage Preservation Services, National Park Service, 

with the assistance of Charles Fisher, National Park Service. Thanks are extended to Elizabeth Creveling and Dan Bruechert of the National Park 

Service for their collaboration and Michael Auer for his review.

Booklets on federal tax credits for small building types are prepared pursuant to the National Preservation Act, as amended, which directs the 

Secretary of the Interior to develop and make available information concerning the preservation of historic properties. This and other guidance 

on rehabilitating small buildings can be found on our web site at www.nps.gov/history/hps/tps/ or by writing Technical Preservation Services-2255, 

National Park Service, 1849 C Street NW, Washington, D.C. 20240.

2007

Frequently Asked Questions