Historic

Preservation 

Tax Incentives

National Park Service

U.S. Department of the Interior

Technical Preservation Services
Technical Preservation Services

National Park Service

2009

This booklet describes the Federal Historic 

Preservation Tax Incentives in general 

terms only. Every effort has been made 

to present current information as of the date given 

below. However, the Internal Revenue Code is 

complex and changes frequently. Furthermore, the 

provisions of the tax code regarding at-risk rules, 

passive activity limitation, and alternative minimum 

tax can affect a taxpayer’s ability to use these tax 

credits. Readers are strongly advised to consult an 

accountant, tax attorney, or other professional tax 

advisor, legal counsel, or the Internal Revenue Service 

for help in determining whether these incentives 

apply to their own situations. For more detailed 

information, including copies of application forms, 

regulations, and other program information, contact 

one of the offices listed on pages 26-29. 

Department of the Interior regulations governing 

the procedures for obtaining historic preservation 

certifications are more fully explained in Title 36 

of the Code of Federal Regulations, Part 67. The 

Internal Revenue Service regulations governing 

the tax credits for rehabilitation are contained in 

Treasury Regulation Section 1.48-12. These sets 

of regulations take precedence in the event of any 

inconsistency with this booklet.

Preservation Tax Incentives 2

What Is a Tax Credit? 3

20% Rehabilitation Tax Credit 4

Rehabilitation Tax Credits: Who Does What? 14

10% Rehabilitation Tax Credit 16

The 10% or 20% Credit: Which One Applies? 17

Other Tax Provisions Affecting Use of 

Preservation Tax Incentives 17

Rehabilitations Involving Governments and 

Other Tax-Exempt Entities 21

Other Tax Incentives for Historic Preservation 21

The Secretary of the Interior’s Standards

for Evaluating Significance Within 

Registered Historic Districts 23

The Secretary of the Interior’s Standards 

for Rehabilitation 24

For More Information

National Park Service, Internal Revenue Service 

and State Historic Preservation Offices 26

Quick Reference 

Cover: German Bank, Dubuque, Iowa (1901). After rehabilitation for 

continued commercial and residential use. Courtesy State Historical 

Society of Iowa. Photograph: John Zeller.
2 3

Current tax incentives for preservation, established 

by the Tax Reform Act of 1986 (PL 99-514; Internal 

Revenue Code Section 47 [formerly Section 48(g)]) 

include:

» a 20% tax credit for the certified rehabilitation of 

certified historic structures.

» a 10% tax credit for the rehabilitation of nonhistoric, non-residential buildings built before 1936.

From time to time, Congress has increased these credits 

for limited periods for the rehabilitation of buildings 

located in areas affected by natural disasters. For more 

information, see the instructions on IRS Form 3468, 

Investment Credit, or contact your State Historic 

Preservation Office.

In all cases the rehabilitation must be a substantial one 

and must involve a depreciable building. (These terms 

will be explained later.)

What Is a Tax Credit?

A tax credit differs from an income tax deduction. An 

income tax deduction lowers the amount of income 

subject to taxation. A tax credit, however, lowers the 

amount of tax owed. In general, a dollar of tax credit 

reduces the amount of income tax owed by one dollar.

» The 20% rehabilitation tax credit equals 20% of the 

amount spent in a certified rehabilitation of a certified 

historic structure.

» The 10% rehabilitation tax credit equals 10% of the 

amount spent to rehabilitate a non-historic building

built before 1936.

Preservation Tax Incentives

Historic buildings are tangible links with the past. They 

help give a community a sense of identity, stability and 

orientation. The Federal government encourages the 

preservation of historic buildings through various means. 

One of these is the program of Federal tax incentives to 

support the rehabilitation of historic and older buildings. 

The Federal Historic Preservation Tax Incentives program 

is one of the Federal government’s most successful and 

cost-effective community revitalization programs.

The National Park Service administers the program with 

the Internal Revenue Service in partnership with State 

Historic Preservation Offices. The tax incentives promote 

the rehabilitation of historic structures of every period, 

size, style and type. They are instrumental in preserving 

the historic places that give cities, towns and rural areas 

their special character. The tax incentives for preservation 

attract private investment to the historic cores of cities and 

towns. They also generate jobs, enhance property values, 

and augment revenues for State and local governments 

through increased property, business and income 

taxes. The Preservation Tax Incentives also help create 

moderate and low-income housing in historic buildings. 

Through this program, abandoned or underused schools, 

warehouses, factories, churches, retail stores, apartments, 

hotels, houses, and offices throughout the country have 

been restored to life in a manner that maintains their 

historic character.

Armstrong Cork Company Plant, Pittsburgh, 

Pennsylvania (1901-1913). After rehabilitation for 

retail and housing. Photograph: Charles Uhl.
4 5

A State or local historic district may also qualify as a

registered historic district if the district and the enabling 

statute are certified by the Secretary of the Interior.)

Obtaining Certified Historic Structure Status

Owners of buildings within historic districts 

must complete Part 1 of the Historic Preservation 

Certification Application—Evaluation of Significance. 

The owner submits this application to the SHPO. The 

SHPO reviews the application and forwards it to the 

NPS with a recommendation for approving or denying 

the request. The NPS then determines whether the 

building contributes to the historic district. If so, the 

building then becomes a certified historic structure. 

The NPS bases its decision on the Secretary of the 

Interior’s “Standards for Evaluating Significance within 

Registered Historic Districts” (see page 23).

Buildings individually listed in the National Register of 

Historic Places are already certified historic structures. 

Owners of these buildings need not complete the Part 

1 application (unless the listed property has more than 

one building).

Property owners unsure if their building is listed in 

the National Register or if it is located in a National 

Register or certified State or local historic district 

should contact their SHPO.

20% Rehabilitation Tax Credit

The Federal historic preservation tax incentives program 

(the 20% credit) is jointly administered by the U.S. 

Department of the Interior and the Department of the 

Treasury. The National Park Service (NPS) acts on behalf 

of the Secretary of the Interior, in partnership with 

the State Historic Preservation Officer (SHPO) in each 

State. The Internal Revenue Service (IRS) acts on behalf 

of the Secretary of the Treasury. Certification requests 

(requests for approval for a taxpayer to receive these 

benefits) are made to the NPS through the appropriate 

SHPO. Comments by the SHPO on certification requests 

are fully considered by the NPS. However, approval of 

projects undertaken for the 20% tax credit is conveyed 

only in writing by duly authorized officials of the 

National Park Service. For a description of the roles of 

the NPS, the IRS and the SHPO, see “Tax Credits: Who 

Does What?” on pages 14 -15.

The 20% rehabilitation tax credit applies to any project 

that the Secretary of the Interior designates a certified 

rehabilitation of a certified historic structure. The 20% 

credit is available for properties rehabilitated for 

commercial, industrial, agricultural, or rental residential 

purposes, but it is not available for properties used 

exclusively as the owner’s private residence.

What is a “certified historic structure?”

A certified historic structure is a building that is listed 

individually in the National Register of Historic Places 

—OR— a building that is located in a registered historic 

district and certified by the National Park Service as 

contributing to the historic significance of that district. 

The “structure” must be a building—not a bridge, ship, 

railroad car, or dam. (A registered historic district is any 

district listed in the National Register of Historic Places. 

Hanny’s Building, Phoenix, Arizona (1947). After 

rehabilitation of this department store for restaurant and 

other commercial use. Photograph: Ryden Architects, Inc.
6 7

years for nonresidential property. The owner submits the 

application to the SHPO. The SHPO provides technical 

assistance and literature on appropriate rehabilitation 

treatments, advises owners on their applications, makes 

site visits when possible, and forwards the application to 

the NPS, with a recommendation.

The NPS reviews the rehabilitation project for 

conformance with the “Secretary of the Interior’s 

Standards for Rehabilitation,” and issues a certification 

decision. The entire project is reviewed, including related 

demolition and new construction, and is certified, or 

approved, only if the overall rehabilitation project meets 

the Standards. These Standards appear on pages 24-25. 

Both the NPS and the IRS strongly encourage owners to 

apply before they start work.

What if my building is not yet listed in the 

National Register?

Owners of buildings that are not yet listed individually 

in the National Register of Historic Places or located in 

districts that are not yet registered historic districts may 

use the Historic Preservation Certification Application, 

Part 1, to request a preliminary determination of 

significance from the National Park Service. Such a 

determination may also be obtained for a building 

located in a registered historic district but that is outside 

the period or area of significance of the district. A 

preliminary determination of significance allows NPS to 

review Part 2 of the application describing the proposed 

rehabilitation. Preliminary determinations, however, are 

not binding. They become final only when the building 

or the historic district is listed in the National Register or 

when the district documentation is amended to include 

additional periods or areas of significance. It is the 

owner’s responsibility to obtain such listing through the 

State Historic Preservation Office in a timely manner.

What is a “certified rehabilitation?”

The National Park Service must approve, or “certify,” 

all rehabilitation projects seeking the 20% rehabilitation 

tax credit. A certified rehabilitation is a rehabilitation of 

a certified historic structure that is approved by the NPS 

as being consistent with the historic character of the 

property and, where applicable, the district in which it 

is located. The NPS assumes that some alteration of the 

historic building will occur to provide for an efficient 

use. However, the project must not damage, destroy, or 

cover materials or features, whether interior or exterior, 

that help define the building’s historic character.

Application Process

Owners seeking certification of rehabilitation work 

must complete Part 2 of the Historic Preservation 

Certification Application—Description of Rehabilitation. 

Long-term lessees may also apply if their remaining lease 

period is at least 27.5 years for residential property or 39 

58 B Street, Virginia City, Nevada (1875). Rehabilitated as a bed 

and breakfast. Courtesy Chris Eichin.
8 9

Processing Fees

The NPS charges a fee for reviewing applications, except 

where the total rehabilitation cost is under $20,000. Fees 

are charged according to a two-tiered system: a preliminary 

fee and a final fee. The $250 preliminary fee covers NPS 

review of proposed work. The final fee covers NPS review 

of completed projects. The final fee depends on the 

rehabilitation costs, according to the fee schedule below. 

The preliminary fee is deducted from the final fee. Payment 

should not be sent until requested by NPS. The NPS will 

not issue a certification decision until payment has been 

received. Fees—current as of this printing—may change. 

See the NPS website on page 26 for any fee changes.

Fee Cost of Rehabilitation

$500 $20,000 to $99,999

$800 $100,000 to $499,999

$1,500 $500,000 to $999,999

$2,500 $1,000,000 or more

IRS Requirements 

To be eligible for the 20% rehabilitation tax credit, a project 

must also meet basic IRS requirements:

» The building must be depreciable. That is, it must be 

used in a trade or business or held for the production 

of income. It may be used for offices, for commercial, 

industrial or agricultural enterprises, or for rental 

housing. It may not serve exclusively as the owner’s 

private residence.

» The rehabilitation must be substantial. That is, 

during a 24-month period selected by the taxpayer, 

rehabilitation expenditures must exceed the greater 

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

its structural components. The adjusted basis is 

generally the purchase price, minus the cost of land, 

plus improvements already made, minus depreciation 

already taken. Once the substantial rehabilitation 

test is met, the credit may be claimed for all qualified 

After the rehabilitation work is completed, the owner 

submits Part 3 of the Historic Preservation Certification 

Application—Request for Certification of Completed 

Work to the SHPO. The SHPO forwards the application 

to the NPS, with a recommendation as to certification. 

The NPS then evaluates the completed project against 

the work proposed in the Part 2—Description of 

Rehabilitation. Only completed projects that meet the 

Standards for Rehabilitation are approved as “certified 

rehabilitations” for purposes of the 20% rehabilitation 

tax credit. 

Before

After

Carleton Place (historic name: Simmons Manufacturing Company), St. 

Paul, Minnesota (1909). Before and after rehabilitation for residential use. 

Courtesy Hess, Roise and Company.
10 11

Getting your project approved, or “certified”

Tens of thousands of projects have been approved for the 

historic preservation tax credit. Observing the following 

points will make approval of your project easier:

» Apply as soon as possible—preferably before beginning 

work. Consult with the SHPO as soon as you can. 

Read carefully the program application, regulations, 

and any other information the SHPO supplies. 

Submit your application early in the project 

planning. Wait until the project is approved in 

writing by the NPS before beginning work. Work 

undertaken prior to approval by the NPS may 

jeopardize certification. In the case of properties 

not yet designated certified historic structures, apply 

before the work is completed and the building is 

placed in service.

expenditures incurred before the measuring period, 

during the measuring period and after the measuring 

period through the end of the taxable year that the 

building is placed in service.

» Phased rehabilitations—that is, rehabilitations 

expected to be completed in two or more distinct 

stages of development—must also meet the 

“substantial rehabilitation test.” However, for phased 

rehabilitations, the measuring period is 60 months 

rather than 24 months. This phase rule is available only 

if: (1) a set of architectural plans and specifications 

outlines and describes all rehabilitation phases; (2) the 

plans are completed before the physical rehabilitation 

work begins, and (3) it can reasonably be expected 

that all phases will be completed.

» The property must be placed in service (that is, 

returned to use). The rehabilitation tax credit is 

generally allowed in the taxable year the rehabilitated 

property is placed in service.

» The building must be a certified historic structure

when placed in service. If the building or the historic 

district is not listed in the National Register, the 

owner must have requested that the SHPO nominate 

the building or the district to the National Register 

before the building is placed in service. If the building 

is located in a historic district that is listed in the 

National Register, the owner must submit Part 1 of the 

application before the rehabilitated building is placed 

in service.

» Qualified rehabilitation expenditures include 

costs of the work on the historic building, as well 

as architectural and engineering fees, site survey 

fees, legal expenses, development fees, and other 

construction-related costs, if such costs are 

added to the property basis and are reasonable 

and related to the services performed. They 

do not include acquisition or furnishing costs, 

new additions that expand the building, new 

building construction, or parking lots, sidewalks, 

landscaping, or other related facilities.

114 NW Main Street, Rocky Mount, North Carolina (1928). 

Photograph: William Ferguson.
12 13

been received when the taxpayer files the tax return 

claiming the credit, a copy of the first page of the 

Historic Preservation Certification Application—Part 

2 must be filed with the tax return, with proof that the 

building is a certified historic structure or that such status 

has been requested. The copy of the application filed 

must show evidence that it has been received by either 

the SHPO or the NPS (date-stamped receipt or other 

notice is sufficient). If the taxpayer then fails to receive 

final certification within 30 months after claiming the 

credit, the taxpayer must agree to extend the period 

of assessment. If the NPS denies certification to a 

rehabilitation project, the credit will be disallowed.

Recapture of the Credit 

The owner must hold the building for five full years after 

completing the rehabilitation, or pay back the credit. If 

the owner disposes of the building within a year after it 

is placed in service, 100% of the credit is recaptured. For 

properties held between one and five years, the tax credit 

recapture amount is reduced by 20% per year.

The NPS or the SHPO may inspect a rehabilitated 

property at any time during the five-year period. The 

NPS may revoke certification if work was not done as 

described in the Historic Preservation Certification 

Application, or if unapproved alterations were made for 

up to five years after certification of the rehabilitation. 

The NPS will notify the IRS of such revocations.

» Photograph the building inside and outside—before 

and after the project. “Before” photographs are 

especially important. Without them, it may be 

impossible for the NPS to approve a project.

» Read and follow the “Secretary of the Interior’s 

Standards for Rehabilitation” and the “Guidelines for 

Rehabilitating Historic Buildings.” If you are unsure 

how they apply to your building, consult with the 

SHPO or the NPS.

» Once you have applied, alert the SHPO and the NPS 

to any changes in the project.

Claiming the 20% Rehabilitation 

Tax Credit

Generally, the tax credit is claimed on IRS form 3468 

for the tax year in which the rehabilitated building is 

placed in service. For phased projects, the tax credit 

may be claimed before completion of the entire project 

provided that the substantial rehabilitation test has been 

met. If a building remains in service throughout the 

rehabilitation, then the credit may be claimed when the 

substantial rehabilitation test has been met. In general, 

unused tax credit can be “carried back” one year and 

“carried forward” 20 years.

The IRS requires that the NPS certification of completed 

work (Application Part 3) be filed with the tax return 

claiming the tax credit. If final certification has not yet 

Prizery/R.J. Reynolds Tobacco Warehouse, South Boston, 

Virginia (1900). Rehabilitated for commercial use. 

Photographs: Ian Bradshaw. 
14 15

» Issues all certification decisions (approvals or 

denials) in writing.

» Transmits copies of all decisions to the IRS.

» Develops and publishes program regulations, 

the Secretary of the Interior’s Standards for 

Rehabilitation, the Historic Preservation 

Certification Application, and information on 

rehabilitation treatments.

IRS

» Publishes regulations governing which rehabilitation 

expenses qualify, the time periods for incurring 

expenses, the tax consequences of certification 

decisions by NPS, and all other procedural and 

legal matters concerning both the 20% and the 10% 

rehabilitation tax credits.

» Answers public inquiries concerning legal and 

financial aspects of the Historic Preservation Tax 

Incentives, and publishes the audit guide, Market 

Segment Specialization Program: Rehabilitation Tax 

Credit, to assist owners.

» Insures that only parties eligible for the 

rehabilitation tax credits utilize them.

Depreciation

Rehabilitated property is depreciated using the straightline method over 27.5 years for residential property 

and over 39 years for nonresidential property. The 

depreciable basis of the rehabilitated building must be 

reduced by the full amount of the tax credit claimed. 

Rehabilitation Tax Credits:

Who Does What?

The Federal historic preservation tax incentives 

program is a partnership among the National Park 

Service (NPS), the State Historic Preservation Officer 

(SHPO), and the Internal Revenue Service (IRS). Each 

plays an important role.

SHPO

» Serves as first point of contact for property owners.

» Provides application forms, regulations, and other 

program information.

» Maintains complete records of the State’s buildings 

and districts listed in the National Register of 

Historic Places, as well as State and local districts 

that may qualify as registered historic districts.

» Assists anyone wishing to list a building or a district 

in the National Register of Historic Places.

» Provides technical assistance and literature on 

appropriate rehabilitation treatments.

» Advises owners on their applications and makes 

site visits on occasion to assist owners.

» Makes certification recommendations to the NPS.

NPS

» Reviews all applications for conformance to 

the Secretary of the Interior’s Standards for 

Rehabilitation.

Odd Fellows Building, Raleigh, North Carolina (c. 1880). Rehabilitated for 

continued commercial use. Courtesy Empire Properties.
16 17

The 10% or 20% Credit: Which 

One Applies?

The 10% rehabilitation tax credit applies only to nonhistoric buildings first placed in service before 1936 

and rehabilitated for non-residential uses. The 20% 

rehabilitation tax credit applies only to certified historic 

structures, and may include buildings built after 1936. 

The two credits are mutually exclusive. 

Buildings listed in the National Register of Historic 

Places are not eligible for the 10% credit. Buildings 

located in National Register listed historic districts or 

certified State or local historic districts are presumed 

to be historic and are therefore not eligible for the 10% 

credit. In general, owners of buildings in these historic 

districts may claim the 10% credit only if they file Part 

1 of the Historic Preservation Certification Application 

with the National Park Service before the physical work 

begins and receive a determination that the building 

does not contribute to the district and is not a certified 

historic structure. 

Other Tax Provisions Affecting 

Use of Preservation Tax 

Incentives

A number of provisions in the Internal Revenue Code 

affect the way in which real estate investments are 

treated generally. These provisions include the “at-risk” 

rules, the passive activity limitation, and the alternative 

minimum tax. What these provisions mean, in practice, 

is that many taxpayers may not be able to use tax credits 

earned in a certified rehabilitation project. 

A brief discussion of these matters follows. Applicants 

should seek professional advice concerning the 

personal financial implications of these provisions.

At-Risk Rules

Under Internal Revenue Code Section 465, a taxpayer 

may deduct losses and obtain credits from a real estate 

10% Rehabilitation Tax Credit 

The 10% rehabilitation tax credit is available for the 

rehabilitation of non-historic buildings placed in service 

before 1936. 

As with the 20% rehabilitation tax credit, the 10% 

credit applies only to buildings—not to ships, bridges or 

other structures. The rehabilitation must be substantial, 

exceeding either $5,000 or the adjusted basis of the 

property, whichever is greater. And the property must 

be depreciable.

The 10% credit applies only to buildings rehabilitated 

for non-residential uses. Rental housing would thus 

not qualify. Hotels, however, would qualify. They are 

considered to be in commercial use, not residential.

A building that was moved after 1935 is ineligible for 

the 10% rehabilitation credit. (A moved certified historic 

structure, however, can still be eligible for the 20% 

credit.) Furthermore, projects undertaken for the 10% 

credit must meet a specific physical test for retention of 

external walls and internal structural framework:

» at least 50% of the building’s external walls 

existing at the time the rehabilitation began must 

remain in place as external walls at the work’s 

conclusion, and

» at least 75% of the building’s existing external 

walls must remain in place as either external or 

internal walls, and

» at least 75% of the building’s internal structural 

framework must remain in place.

Claiming the 10% Rehabilitation

Tax Credit

The tax credit must be claimed on IRS form 3468 

for the tax year in which the rehabilitated building is 

placed in service. There is no formal review process for 

rehabilitations of non-historic buildings.
18 19

limited partnerships, cannot be used to offset tax liability 

from “active” sources such as salaries. This passive 

activity limitation does not apply to:

» Most regular corporations.

» Real estate professionals who materially participate 

in a real property trade or business and who satisfy 

eligibility requirements regarding the proportion 

and amount of time spent in such businesses.

For other taxpayers, two exceptions apply: a general 

exception and a specific exception for certified 

rehabilitations.

investment only to the extent that the taxpayer is “atrisk” for the investment. The amount that a taxpayer 

is “at-risk” is generally the sum of cash or property 

contributions to the project plus any borrowed money 

for which the taxpayer is personally liable, including 

certain borrowed amounts secured by the property used 

in the project. In addition, in the case of the activity of 

holding real property, the amount “at-risk” includes 

qualified non-recourse financing borrowed from certain 

financial institutions or government entities.

Passive Activity Limitation 

The passive activity limitation provides that losses and 

credits from “passive” income sources, such as real estate 

Before After

John Harvey House, Detroit, Michigan (1875). (opposite) Before 

rehabilitation; (above) After rehabilitation as a bed and breakfast.

Courtesy: Marilyn Nash-Yazbeck. Photograph: Steven C. Flum, Inc.
20 21

Rehabilitations Involving 

Governments and Other

Tax-Exempt Entities

Property used by governmental bodies, nonprofit 

organizations, or other tax-exempt entities is not 

eligible for the rehabilitation tax credit if the tax-exempt 

entity enters into a disqualified lease (as the lessee) for 

more than 50% of the property. A disqualified lease 

occurs when:

» Part or all of the property was financed directly 

or indirectly by an obligation in which the interest 

is tax-exempt under Internal Revenue Code 

Section 103(a) and such entity (or related entity) 

participated in such financing; or,

» Under the lease there is a fixed or determinable 

price for purchase or an option to buy which 

involves such entity (or related entity); or,

» The lease term is in excess of 20 years; or,

» The lease occurs after a sale or lease of the 

property and the lessee used the property before 

the sale or lease.

Other Tax Incentives for 

Historic Preservation 

Other Federal and State tax incentives exist for 

historic preservation. They may be combined with the 

rehabilitation tax credit.

Charitable Contributions for Historic 

Preservation Purposes 

Internal Revenue Code Section 170(h) and Department 

of the Treasury Regulation Section 1.170A-14 provide 

for income and estate tax deductions for charitable 

contributions of partial interests in historic property 

(principally easements). Generally, the IRS considers 

that a donation of a qualified real property interest 

to preserve a historically important land area or a

General Passive Loss Rules

Taxpayers with incomes less than $100,000 (generally, 

adjusted gross income with certain modifications) may take 

up to $25,000 in losses annually from rental properties. 

This $25,000 annual limit on losses is reduced for 

individuals with incomes between $100,000 and $150,000 

and eliminated for individuals with incomes over $150,000.

Passive Credit Exemption

Individuals, including limited partners, with modified 

adjusted gross incomes of less than $200,000 (and, subject 

to phase out, up to $250,000) investing in a rehabilitation 

credit project may use the tax credit to offset the tax owed 

on up to $25,000 of income. Thus, a taxpayer in the 33% 

tax bracket could use $8,250 of tax credits per year (33% x 

$25,000 = $8,250). 

This $25,000 amount is first reduced by losses allowed 

under the general “passive loss” rule above for taxpayers 

with incomes less than $150,000.

Alternative Minimum Tax 

For purposes of the rehabilitation tax credit, the alternative 

minimum tax does not apply to qualified rehabilitation 

expenditures “properly taken into account for periods after 

December 31, 2007.”

However, for qualified rehabilitation expenditures taken 

into account for periods before January 1, 2008, taxpayers 

who are not required to pay tax under the regular tax 

system may still be liable for tax under the alternative 

minimum tax laws. Alternative minimum taxable income 

is computed from regular taxable income with certain 

adjustments and the addition of all appropriate tax 

preference items. 

Nonrefundable credits, such as the rehabilitation 

tax credit, may not be used to reduce the alternative 

minimum tax. If a taxpayer cannot use the tax credit 

because of the alternative minimum tax, the credit can be 

carried back or forward.
22 23

The Secretary of the Interior’s 

Standards for Evaluating 

Significance Within Registered 

Historic Districts

The following Standards govern whether buildings 

within a historic district contribute to the significance 

of the district. Owners of buildings that meet these 

Standards may apply for the 20% rehabilitation tax 

credit. Buildings within historic districts that meet these 

Standards cannot qualify for the 10% credit.

1. A building contributing to the historic significance 

of a district is one which by location, design, setting, 

materials, workmanship, feeling and association 

adds to the district’s sense of time and place and 

historical development.

2. A building not contributing to the historic 

significance of a district is one which does not 

add to the district’s sense of time and place and 

historical development; or one where the location, 

design, setting, materials, workmanship, feeling 

and association have been so altered or have so 

deteriorated that the overall integrity of the building 

has been irretrievably lost.

3. Ordinarily buildings that have been built within 

the past 50 years shall not be considered to 

contribute to the significance of a district unless 

a strong justification concerning their historical 

or architectural merit is given or the historical 

attributes of the district are considered to be less 

than 50 years old.

certified historic structure meets the test of a charitable 

contribution for conservation purposes. For purposes 

of the charitable contribution provisions only, a certified 

historic structure need not be depreciable to qualify, and 

may include the land area on which it is located.

A facade easement on a building in a registered historic 

district must preserve the entire exterior of the building 

(including its front, sides, rear, and height) and must 

prohibit any change to the exterior of the building that 

is inconsistent with its historic character. The easement 

donor must enter into a written agreement with the 

organization receiving the easement contribution, and 

must provide additional substantiation requirements. If 

the deduction claimed is over $10,000, the taxpayer must 

pay a $500 filing fee. For additional information, see IRS 

publication 526. 

State Tax Incentives

A number of States offer tax incentives for historic 

preservation. They include tax credits for rehabilitation, 

tax deductions for easement donations, and property 

tax abatements or moratoriums. The SHPO will have 

information on current State programs. Requirements 

for State incentives may differ from those outlined here. 

Tax Credit for Low-Income Housing

The Tax Reform Act of 1986 (IRC Section 42) also 

established a tax credit for the acquisition and 

rehabilitation, or new construction of low-income 

housing. The credit is approximately 9% per year for 

10 years for projects not receiving certain Federal 

subsidies and approximately 4% for 10 years for projects 

subsidized by tax-exempt bonds or below market Federal 

loans. The units must be rent restricted and occupied 

by individuals with incomes below the area median 

gross income. The law sets a 15-year compliance period. 

Credits are allocated by State housing credit agencies. 

The tax credit for low-income housing can be combined 

with the tax credit for the rehabilitation of certified 

historic structures. 
24 25

6. Deteriorated historic features shall be repaired 

rather than replaced. Where the severity of 

deterioration requires replacement of a distinctive 

feature, the new feature shall match the old in 

design, color, texture, and other visual qualities and, 

where possible, materials. Replacement of missing 

features shall be substantiated by documentary, 

physical, or pictorial evidence.

7. Chemical or physical treatments, such as 

sandblasting, that cause damage to historic materials 

shall not be used. The surface cleaning of structures, 

if appropriate, shall be undertaken using the gentlest 

means possible.

8. Significant archeological resources affected by a 

project shall be protected and preserved. If such 

resources must be disturbed, mitigation measures 

shall be undertaken.

9. New additions, exterior alterations, or related new 

construction shall not destroy historic materials that 

characterize the property. The new work shall be 

differentiated from the old and shall be compatible 

with the massing, size, scale, and architectural 

features to protect the historic integrity of the 

property and its environment.

10. New additions and adjacent or related new 

construction shall be undertaken in such a manner 

that if removed in the future, the essential form 

and integrity of the historic property and its 

environment would be unimpaired.

The Secretary of the Interior’s 

Standards for Rehabilitation

Rehabilitation projects must meet the following 

Standards, as interpreted by the National Park Service, 

to qualify as “certified rehabilitations” eligible for 

the 20% rehabilitation tax credit. The Standards are 

applied to projects in a reasonable manner, taking into 

consideration economic and technical feasibility.

The Standards (36 CFR Part 67) apply to historic 

buildings of all periods, styles, types, materials, and 

sizes. They apply to both the exterior and the interior 

of historic buildings. The Standards also encompass 

related landscape features and the building’s site and 

environment as well as attached, adjacent, or related 

new construction.

1. A property shall be used for its historic purpose 

or be placed in a new use that requires minimal 

change to the defining characteristics of the 

building and its site and environment.

2. The historic character of a property shall be 

retained and preserved. The removal of historic 

materials or alteration of features and spaces that 

characterize a property shall be avoided.

3. Each property shall be recognized as a physical 

record of its time, place, and use. Changes that 

create a false sense of historical development, such 

as adding conjectural features or architectural 

elements from other buildings, shall not be 

undertaken.

4. Most properties change over time; those changes 

that have acquired historic significance in their 

own right shall be retained and preserved.

5. Distinctive features, finishes, and construction 

techniques or examples of craftsmanship that 

characterize a historic property shall be preserved.

Van Allen and Son Department 

Store, Clinton, Iowa (1913-

1915). Courtesy Community 

Housing Initiatives, Inc. 
26 27

State Historic Preservation Offices

Websites for the State Historic Preservation Offices listed 

below can be found at: www.ncshpo.org

ALABAMA, Alabama Historical Commission, 468 South 

Perry Street, Montgomery, AL 36130-0900, 334-242-3184. 

ALASKA, History and Archeology, Department of Natural 

Resources, Division of Parks and Outdoor Recreation, 550 W. 

7th Avenue, Suite 1310, Anchorage, AK 99501-3565, 907-269-

8721. ARIZONA, Office of Historic Preservation, Arizona State 

Parks, 1300 W. Washington, Phoenix, AZ 85007, 602-542-4009. 

ARKANSAS, Arkansas Historic Preservation Program, 1500 Tower 

Building, 323 Center Street, Little Rock, AR 72201, 501-324-9880. 

CALIFORNIA, Office of Historic Preservation, Department of 

Parks and Recreation, PO Box 942896, Sacramento, CA 94296-

0001, 916-653-6624. COLORADO, Colorado Historical Society, 

Colorado History Museum, 1300 Broadway, Denver, CO 80203-

2137, 303-866-3355. CONNECTICUT, Connecticut Commission 

on Culture and Tourism, History and Museums Division, One 

Constitution Plaza, 2nd Floor, Hartford, CT 06103, 860-256-2800. 

DELAWARE, Division of Historical and Cultural Affairs, 21 

The Green, Dover, DE 19901, 302-736-7400. DISTRICT OF 

COLUMBIA, Historic Preservation Office, D.C. Office of 

Planning, 801 North Capitol Street, NE, 3rd floor, Washington, 

DC 20002, 202-442-8800. FLORIDA, Division of Historical 

Resources, Department of State, R.A. Gray Building, 500 S. 

Bronough Street, Tallahassee, FL 32399-0250, 850-245-6333. 

GEORGIA, Department of Natural Resources, Historic 

Preservation Division, 34 Peachtree Street, NW, Suite 1600, 

Atlanta, GA 30303, 404-656-2840. HAWAII, Hawaii Historic 

Preservation Office, 1151 Punchbowl Street, Honolulu, HI 96813, 

808-587-0401. IDAHO, Idaho State Historic Preservation Office, 

210 Main St., Boise, ID 83702-7264, 208-334-3861. ILLINOIS, 

Illinois Historic Preservation Agency, Preservation Services 

Division, One Old State Capitol Plaza, Springfield, IL 62701, 217-

782-4836. INDIANA, Department of Natural Resources, 402 West 

Washington Street, Room W 274, Indianapolis, IN 46204, 317-

232-4020. IOWA, State Historical Society of Iowa, 600 East Locust 

Street, Des Moines, IA 50319-0290, 515-281-4137.

KANSAS, Kansas State Historical Society, Cultural Resources 

Division, 6425 SW 6th Avenue, Topeka, KS 66615-1099, 785-272-

8681, ext. 240. 

For More Information

For more information on tax incentives for historic 

preservation, contact the NPS, the IRS, or one of the 

SHPOs listed below. Available information includes:

» A Catalog of NPS publications on appropriate 

methods to preserve historic buildings. These include 

Guidelines for Rehabilitating Historic Buildings, 

Preservation Briefs, and many others.

» The Historic Preservation Certification Application (a 

3-part form: Part 1—Evaluation of Significance; Part 

2—Description of Rehabilitation; Part 3—Request for 

Certification of Completed Work).

» Department of the Interior, National Park Service, 

regulations on “Historic Preservation Certifications.” 

[36 CFR Part 67].

» Department of the Treasury, Internal Revenue Service, 

regulations on “Investment Tax Credit for Qualified 

Rehabilitation Expenditures.” [Treasury Regulation 

Section 1.48-12].

» Market Segment Specialization Program: Rehabilitation 

Tax Credit (available only from the IRS).

National Park Service

Preservation Tax Incentives

Technical Preservation Services

National Park Service

1849 C St., NW (org code 2255)

Washington, DC 20240

tel: 202-513-7270

email: nps_hps-info@nps.gov

web: www.nps.gov/history/hps/tps/tax/

Internal Revenue Service

web: www.nps.gov/history/hps/tps/tax/IRS.htm 

Additional IRS website: www.irs.gov/businesses/small/

industries/article/0,,id=97599,00.html
28

KENTUCKY, Kentucky Heritage Council, 300 Washington 

Street, Frankfort, KY 40601, 502-564-7005. LOUISIANA, Office 

of Cultural Development, PO Box 44247, Baton Rouge, LA 

70804, 225-342-8160. MAINE, Maine Historic Preservation 

Commission, 55 Capitol Street, Station 65, Augusta, ME 

04333-0065, 207-287-2132. MARYLAND, Maryland Historical 

Trust, 100 Community Place, Crownsville, MD 21032-2023, 

410-514-7600. MASSACHUSETTS, Massachusetts Historical 

Commission, Massachusetts Archives Facility, 220 Morrissey 

Boulevard, Boston, MA 02125, 617-727-8470. MICHIGAN, 

State Historic Preservation Office, Michigan Historical Center, 

Department of History, Arts and Libraries, PO Box 30740, 702 

W. Kalamazoo Street, Lansing, MI 48909-8240, 517-373-1630. 

MINNESOTA, Minnesota Historical Society, State Historic 

Preservation Office, 345 Kellogg Boulevard West, St. Paul, MN 

55102, 651-259-3450. MISSISSIPPI, Department of Archives 

and History, PO Box 571, Jackson, MS 39205, 601-576-6850. 

MISSOURI, Department of Natural Resources, PO Box 176, 

Jefferson City, MO 65102, 573-751-7858. MONTANA, Montana 

Historical Society, 1410 8th Avenue, PO Box 201202, Helena, 

MT 59620-1202, 406-444-7715. NEBRASKA, Nebraska State 

Historical Society, 1500 R Street, PO Box 82554, Lincoln, 

NE 68501-2554, 402-471-4746. NEVADA, State Historic 

Preservation Office, Department of Cultural Affairs, 100 No. 

Stewart Street, Capitol Complex, Carson City, NV 89701, 

775-684-3448. NEW HAMPSHIRE, Division of Historical 

Resources, 19 Pillsbury Street, 2nd Floor, Concord, NH 03301, 

603-271-6435. NEW JERSEY, Department of Environmental 

Protection, Historic Preservation Office, PO Box 404, Trenton, 

NJ 08625-0404, 609-292-2023. NEW MEXICO, State Historic 

Preservation Division, Office of Cultural Affairs, Villa Rivera 

Building, 3rd floor, 228 E. Palace Avenue, Santa Fe, NM 87503, 

505-827-6320. NEW YORK, Office of Parks, Recreation and 

Historic Preservation, Bureau of Historic Preservation, Peebles 

Island, PO Box 189, Waterford, NY 12188-0189, 518-237-8643. 

NORTH CAROLINA, Office of Archives and History, 4617 

Mail Service Center, Raleigh, NC 27699-4617, 919-807-6585. 

NORTH DAKOTA, State Historical Society of North Dakota, 

ND Heritage Center, 612 East Boulevard Ave., Bismarck, ND 

58505, 701-328-2666.

OHIO, Historic Preservation Office, Ohio Historical Society, 

1982 Velma Avenue, Columbus, OH 43211-2497, 614-298-2000. 

OKLAHOMA, State Historic Preservation Office, Oklahoma 

History Center, 2401 North Laird Avenue, Oklahoma City, 

OK 73105-7914, 405-521-6249. OREGON, Oregon Historic 

Preservation Office, 725 Summer St. NE, Suite C, Salem 

OR 97301, 503-986-0688. PENNSYLVANIA, Pennsylvania 

Historical and Museum Commission, Bureau for Historic 

Preservation, Commonwealth Keystone Building, 400 North 

Street, 2nd floor, Harrisburg, PA 17120-0093, 717-787-0772. 

COMMONWEALTH OF PUERTO RICO, State Historic 

Preservation Office, La Fortaleza, PO Box 82, San Juan, PR 

00901, 787-721-3737. RHODE ISLAND, Rhode Island 

Historical Preservation and Heritage Commission, Old State 

House, 150 Benefit Street, Providence, RI 02903, 401-277-2678.

SOUTH CAROLINA, Department of Archives and History, 

8301 Parklane Road, Columbia, SC 29223-4905, 803-896-6196. 

SOUTH DAKOTA, South Dakota State Historical Society, 

900 Governors Drive, Pierre, SD 57501-2217, 605-773-3458. 

TENNESSEE, Tennessee Historical Commission, 2941 

Lebanon Road, Nashville, TN 37243-0442, 615-532-1550. 

TEXAS, Texas Historical Commission, PO Box 12276, Austin, 

TX 78711-2276, 512-463-6094. UTAH, Utah State Historical 

Society, 300 S. Rio Grande, Salt Lake City, UT 84101-1106, 

801-533-3500. VERMONT, Vermont Division for Historic 

Preservation, National Life Building, Drawer 20, Montpelier, VT 

05620-0501, 802-828-3056. VIRGIN ISLANDS, Virgin Islands 

State Historic Preservation Office, Kongens Gade 17, Charlott 

Amalie, St. Thomas, VI 00802, 340-776-8605. VIRGINIA, 

Department of Historic Resources, 2801 Kensington Avenue, 

Richmond, VA 23221, 804-367-2323. WASHINGTON, 

Department of Archaeology and Historic Preservation, PO Box 

48343, Olympia, Washington 98504-8343, 360-586-3065. WEST 

VIRGINIA, Division of Culture and History, 1900 Kanawha 

Boulevard East, Capitol Complex, Charleston, WV 25305-0300, 

304-558-0240. WISCONSIN, Division of Historic Preservation 

- Public History, Wisconsin Historical Society, 816 State Street, 

Madison, WI 53706, 608-264-6490. WYOMING, State Historic 

Preservation Office, Division of Cultural Resources, Wyoming 

State Parks and Cultural Resources, 3rd Floor Barrett, 2301 

Central Avenue, Cheyenne, WY 82002, 307-777-7697.