The Historic Rehabilitation Tax Credit has been one of the most powerful and effective tool for spurring building rehab for housing. On the federal level, the IRS offers at 20% tax credit (not deduction - credit) for the preservation and adaptive reuse of commercial buildings. The tax credit program is adimistered through each state's historic preservation office (SHPO) and requires approval from the National Park Service and the IRS. Recognizing the success of the federal program, several states have adopted legislation establishing state historic rehabilitation tax credits. These historic rehabilitation tax credit programs tend to have varying eligibility requirements and restrictions from state to state. They can often be combined - or "twinned" - with the federal credit to create an even greater incentive to rehab. Additionally, federal rehab credits can be combined with other incentive programs, such as the low-income housing credit and the New Markets Tax Credit, to being even more value to preservation.
The National Trust and its partners advocate for public policies that benefit historic preservation by:
- passing legislation and implementing policies that preserve the historic and cultural fabric of our nation's communities;
- protecting historic and cultural resources from inappropriate legislation, regulatory rulings, or court decisions that hinder preservation;
- preserving community input in the policy-making process; and, researching and documenting best practices and model preservation policies.
The Mills Act: The Mills Act, named for San Diegan James Mills, a former State Senator, provides an important monetary incentive designed to encourage the preservation, maintenance, and restoration of designated historic properties.
The Mills Act provides that property that is subject to a historical property contract be valued using the rental income that could be expected from that property rather than using comparable sales to establish the assessed value. This generally results in a much lower assessment if the property has been recently purchased.