Texas Historic Preservation Tax Credit Program

Eligibility requirements are similar to those for the federal program, but have important distinctions. The main differences in program eligibility are highlighted in our downloadable comparison chart (PDF). 

In order to be eligible for the Texas Historic Preservation Tax Credit, a project must meet the following criteria:

• The property must currently have a state or federal historic designation, or be determined eligible to pursue one. Eligible designations may include: A) listing individually or as a contributing building in a district listed on the National Register of Historic Places, B) as a Recorded Texas Historic Landmark, C) as a State Antiquities Landmark, or D) contributing to the significance of a National Register historic district or other certified historic district. If the building has no historic designation  but is found to be eligible, the nomination process may be undertaken while the work is underway; however, the property must be officially listed by the time the credit is taken. (This differs from the federal program).
• Only buildings qualify for the tax credit. Structures such as bridges, ships, railroad cars, grain silos, and dams are not eligible for the credit.
• The building must be income-producing or non-profit. For example, it may be used as a hotel, for commercial offices, for commercial, industrial, or agricultural purposes, or for rental housing, or any official non-profit use such as a church, museum, or arts center. Owner-occupied residential properties, municipal facilities, and other government-operated properties are not eligible for the credit.
• The cost of the rehabilitation project or scope of work must meet the minimum cost threshold of $5,000 for qualified rehabilitation expenditures. An owner may receive the state tax credits in successive applications for any fiscal year after 2014 if the cost threshold and other program requirements are met. (This differs from the federal program’s requirement for a substantial rehabilitation).
• Most rehabilitation costs are eligible for the credit, such as structural work, building repairs, electrical, plumbing, heating and air conditioning, roof work, and painting. Architectural and engineering fees, site survey fees, legal expenses, development fees, and other construction-related costs are also qualified expenditures if such costs are reasonable and added to the property basis. Some costs are not eligible for the credit, such as property acquisition, new additions, furniture, parking lots, sidewalks, and landscaping.
• The building must be placed in service (returned to use) after the rehabilitation. The tax credit is generally allowed in the taxable year that the rehabilitated property is placed in service or the project is completed. Unused franchise tax credit can be carried forward five years or transferred to another entity. (This differs from the federal program.)
• The work undertaken as part of the project must meet the Secretary of the Interior's Standards for Rehabilitation. The entire project is reviewed, including interior and exterior work, as well as related demolition and new construction. A project is certified, or approved, only if the overall rehabilitation project is determined to meet the standards.

Both federal and state programs require that an application for the tax credit must be submitted before the project is completed. Note that work may begin prior to the application or approval at the applicant’s own risk. Ideally, the application should be submitted during the planning stages of the project so the owner can ensure that the project meets the Secretary of the Interior’s Standards for Rehabilitation. We recommend contacting our staff with information about any specific issues as early as questions arise.

The state application process consists of three parts, A, B, and C, all of which are submitted directly to the THC and reviewed by the History Programs Division or Architecture Division. Please allow at least 30 days for processing and review of any newly submitted information or application materials.

Please note that Parts B and C of the application require application fees. The THC cannot review applications without receiving the appropriate fee. The current fee schedule is located in the downloadable Application Guide. Please be aware that the application fees are non-refundable and simultaneous submissions—Part A and Part B together, or Part B and Part C together—are made at the applicant’s own risk. If an applicant opts to submit multiple parts of the application simultaneously, there is no refund given for Part B or Part C application fees in the event a preceding part of the application is denied. 

• Part A: Evaluation of Significance (Corresponds to federal Part 1)
  The first part of the application determines whether the building currently is listed on the National Register of Historic Places, is designated a Recorded Texas Historic Landmark or State Archeological Landmark, or if it is eligible for listing. If the building is not yet listed but is found to be eligible, the tax credit project may be undertaken while the designation process is pursued. 
  
  For the state program, Part A is required for all properties, to determine that they are a “certified historic structure.” Note that this differs from federal requirements.
   
• Part B: Description of Rehabilitation (Corresponds to federal Part 2)
  The second part of the application describes the existing conditions of the property and the proposed scope of work. Photographs must be provided, which fully describe the building and clearly show the condition of all major character-defining features of the building prior to the start of work. The proposed work is evaluated by THC staff for its conformance to the Standards.
   
• Part C: Request for Certification of Completed Work (Corresponds to federal Part 3)
  The third part of the application is submitted upon completion of the rehabilitation or scope of work, and documents that the work was completed as proposed and in accordance with the Standards. Projects are likely to require a site visit by THC staff for verification. Once the THC determines that the completed work meets the Standards, a Certificate of Eligibility for the state historic tax credit is provided to the owner. This certificate must be presented to the Texas Office of the Comptroller to receive the state tax credits. Note that properties pursuing historic designation cannot receive state Part C certification until the designation has been finalized.

Since the state program is modeled on the federal program, it is straightforward to apply to both programs at the same time if your project meets each program's application criteria. For concurrent application, submit a completed application for the Texas Historic Preservation Tax Credits in addition to the complete federal application. You need only submit a total of one set of all associated supporting documents (e.g. photos) as required for the federal application; do not submit a separate set for the state program.

For concurrent submissions, the federal application will always be processed first, and the state review will be deferred until the final determination has been made on the federal side.

For a visual view of the state and federal application process, please see our Application Flowchart (PDF).