Several state and Federal programs offer tax credits to qualifying renovation projects. A tax credit may be used to pay down taxes owed. For example, the Missouri State Historic Tax Credit applies to substantial renovation projects in qualifying neighborhoods. At the time of this writing, it is equal to 25% of the total renovation cost and may be carried forward ten years and back three. For example:
Total Renovation Cost - $100,000 (qualifying expenditures)
MO Historic Tax Credit - $25,000 (100,000 x .25)
If your annual state income tax is $1,000 (total of $13,000 – forward 10, back 3) then even after ten years, you would not be able to take advantage of the full amount. Taking inflation into account, it may be worthwhile to explore “selling” your tax credits. Businesses with enough tax liability to take advantage of the credits may be willing to purchase them at a discount (they make money by purchasing credits at less than their face value and you get cash in hand). A tax credit “clearing house” will generally pay between $.80 and $.90 on the dollar for your tax credits.
Construction Estimate Excel Worksheet - Download a Microsoft Excel worksheet for developing a construction budget. This worksheet takes potential State Historic Tax Credits into account for projects that qualify.
Using government money (tax credits) to help finance a project brings with it several considerations. The Missouri Department of Natural Resources administers the State Historic Tax Credit Program. In order to approve tax credits for a renovation project, work must be performed in compliance with the Secretary of the Interior’s Standards for Rehabilitation. A descriptive booklet with illustrations and examples can be obtained from the DNR web site for a nominal fee.
The other major tax credit program available for owner-occupants in St. Louis is the Neighborhood Preservation (NPA) tax credit program. Projects receiving NPA credits are not required to meet the Secreary's Standards. NPA tax credits are sometimes referred to as the “lottery” because the total amount distributed is capped by legislation. Projects are drawn from the pool of complete applications until all the money is distributed – last year the State only funded approximately one in ten NPA applications. Applications are usually due in November.
Designated Historic Districts
In order to qualify for Historic Tax Credits, a building must be listed on the National Register of Historic Places or be a contributing building in a recognized historic district. For general information (this method is not exact and may produce some errors) you can look up individual addresses at the Community Development Administration’s Cultural Resources Office web site. For a difinitive answer, contact the Missouri Department of Natural Resources.
http://stlcin.missouri.org/history/beta1a/index.cfm
Most locally designated historic districts qualify for historic tax credits. However, local historic districts also carry additional requirements. In a local district, the Cultural Resources Office must approve all exterior changes on primary facades (typically the front, and anything visible from the street. You cannot apply for a building permit until a CRO official has approved the drawings. Each local district has its own local ordinance with its own requirements. Your architect should research or be familiar with the appropriate requirements.
For more information on Tax Credits, visit the following links:
