Federal, state, and local tax incentives exist for owners of historic properties:
- Federal Historic Preservation Tax Incentives: The Federal Historic Preservation Tax Incentives program offers a 20 percent income tax credit for the rehabilitation of historic, income-producing buildings.
- State Historic Preservation Tax Incentives: State incentives include the newly established Texas Historic Preservation Tax Credit Program and a sales tax exemption on labor available for work to buildings listed in the National Register of Historic Places.
- Local Historic Preservation Tax Incentives: County and local taxing authorities may grant property tax exemptions for buildings with state or local historical designations.
Resources At A Glance
- These tax credit programs are highlighted and described in a one-page downloadable Preservation Tax Incentives Fact Sheet (PDF).
- The two major tax incentives programs administered by the THC are detailed on a downloadable comparison chart (PDF).
- Our new Tax Credit Programs FAQ page is available to address the most commonly asked questions.
- Application forms for the 20 percent federal tax credit and the Texas Historic Preservation Tax Credit may be found by visiting the detail pages for each credit.
Federal Historic Preservation Tax Incentives
20 Percent Tax Credit
A 20 percent federal income tax credit is available for the rehabilitation of historic, income-producing buildings that are listed in or determined eligible for listing in the National Register of Historic Places. The Texas Historical Commission, as the State Historic Preservation Office for Texas, works in conjunction with the National Park Service to review proposed work to ensure it complies with the Secretary of the Interior’s Standards for Rehabilitation. Each year, an average of over $85 million is reinvested in the Texas economy from participation in this program (based on certified expenses from 2008-2011).
Learn more at the Federal Rehabilitation Tax Credit Program detail page.
Read our Frequently Asked Questions page for common tax credit queries.
Learn more about successful rehabilitation tax credit projects:
10 Percent Tax Credit
The former 10 percent Rehabilitation Tax Credit for non-historic buildings has been repealed as of December 2017. On December 22, 2017, Public Law No: 115-97 (Pub. L. 115-97) was signed and enacted, amending the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. Pub. L. 115-97 (Sec. 13402) modifies the 20 Percent Historic Rehabilitation Tax Credit as well as provides certain transition rules. These and other changes to the Internal Revenue Code may affect a taxpayer's ability to use the 20 Percent Historic Tax Credit. Pub. L. 115-97 also repeals the 10 Percent Rehabilitation Tax Credit for non-historic buildings. The text of Pub. L. 115-97 is available at www.congress.gov.
Applicants requesting historic preservation certifications by the National Park Service as well as others interested in the use of these tax credits are strongly advised to consult an accountant, tax attorney, or other professional tax adviser, legal counsel, or the Internal Revenue Service regarding the changes to the Internal Revenue Code related to Pub. L. 115-97.
Tax Benefits for Historic Preservation Easements
The owner of a historic property who donates a preservation easement to a preservation or conservation organization may be eligible for a federal income tax deduction. Generally, the property owner receives a tax deduction for the amount of the reduced economic value of the property due to the restrictions, while still retaining ownership and use of the property. In order to receive tax benefits, specific criteria for the property, agreement, and organization must be met. Additional information on the potential tax benefits of easements is available on the National Park Service website. The THC does not accept voluntary easement donations for tax benefit purposes.
State Historic Preservation Tax Incentives
Texas Historic Preservation Tax Credit Program
Program Overview
During the 83rd Legislative Session, the Texas Legislature passed House Bill 500, which establishes a state tax credit for the certified rehabilitation of certified historic structures. This incentive requires that work to a historic property meet the Secretary of the Interior’s Standards for Rehabilitation to qualify for the credit. Certified historic structures can include properties that are currently listed in the National Register of Historic Places, either individually or as a contributing structure within a historic district, or designated as Recorded Texas Historic Landmarks or State Antiquities Landmarks. The credit is worth 25 percent of the eligible rehabilitation costs for the project, which must be at least $5,000 in value to qualify. In the absence of a state income tax, the credit is applied against a business’s franchise tax liability. It is anticipated that many projects will seek to pair this tax credit with the federal 20 percent tax credit for rehabilitation (see above).
The Texas Historic Preservation Tax Credit Program went into effect on January 1, 2015 for properties placed in service on or after September 1, 2013.
Learn more at the Texas Historic Preservation Tax Credit Program detail page.
For more information on this program and the federal rehabilitation tax credit program, please review the following fact sheet and comparison chart.
Preservation Tax Incentives Fact Sheet (PDF)
Preservation Tax Incentives Comparison Chart (PDF)
Read our Frequently Asked Questions page for common tax credit queries.
Administrative Rules
The Texas Historical Commission has adopted new adminstrative rules for implementation of the Texas Historic Preservation Tax Credit Program as Sections 13.1 - 13.8 of Chapter 13 (Title 13, Part II of the Texas Administrative Code).
Texas Historic Preservation Tax Credit Program Rules
The Texas Historical Commission has adopted new adminstrative rules for implementation of the Texas Historic Preservation Tax Credit Program as Sections 13.1 - 13.8 of Chapter 13 (Title 13, Part II of the Texas Administrative Code). The Commission also proposed an amendment to these rules to clarify the types of entities that may apply for the credit. The adopted rules and proposed amendment are found below. The amendment will also be posted in the Texas Register for public comment for a thirty-day period.
Texas Historic Preservation Tax Credit Program Rules
Texas Historic Preservation Tax Credit Program Rules - Proposed Amendment
- See more at: http://www.thc.texas.gov/preserve/projects-and-programs/preservation-tax...State Sales Tax Exemption on Labor
The State of Texas offers a sales tax exemption on the labor to repair, restore, or remodel a building listed in the National Register of Historic Places. This exemption does not apply to the purchase of materials. It is available only for non-residential buildings, as labor for work on residential real property is not taxable. This exemption is authorized by Title 2, Section 151.3501 of the Texas Tax Code and Title 34, Section 3.357 (d)(4) of the Texas Administrative Code.
Contact the Texas Comptroller of Public Accounts for information on how to obtain a Texas Sales and Use Tax Exemption Certificate.
Local Historic Preservation Tax Incentives
Properties that are designated as Recorded Texas Historic Landmarks, State Antiquities Landmarks, or local landmarks may be eligible for property tax incentives. The local taxing authority must authorize exemptions for historic properties in need of tax relief and will determine the amount of the exemption. Local tax exemptions for historic properties are authorized by Title 1, Section 11.24 of the Texas Tax Code.
Contact your county appraisal district to determine what exemptions are available in your community.
