North Carolina Historic Preservation State Tax Credits

• A 20% state tax credit for rehabilitations of income-producing historic properties that also qualify for the 20% federal investment tax credit. In effect, the combined federal-state credits reduce the cost of a certified rehabilitation of an income-producing historic structure by 40%.
• A state tax credit of 30% for qualifying rehabilitations of nonincome-producing historic structures, including owner-occupied personal residences. There is no equivalent federal credit for such rehabilitations.
• State Mill Rehabilitation Credits may be applied to the rehabilitation of qualifying former textile, tobacco, and furniture plants in lieu of (not in addition to) the standard state historic preservation tax credits. These credits provide even greater incentives for qualifying projects. The incentives vary, depending on the economic development tier for the county assigned by the N.C. Department of Commerce.
  

Some key points and cautionary reminders about the credits:

• Only certified historic structures will qualify for the credits. A "certified historic structure" is defined as a building that is listed in the National Register of Historic Places, either individually or as a contributing building in a National Register historic district, or as a contributing building within a local historic district that has been certified by the Department of the Interior. (There are only three of the latter in North Carolina. These are the Blount Street Historic District in Raleigh, the Goldsboro Historic District, and the Decatur-Hunter Historic District in Madison).
• A nonincome-producing building must be a "certified historic structure" at the time the state credit is taken -- that is, it must actually be listed in the National Register either individually or as part of a district or it will not qualify for the state credit. The federal tax credit for income-producing buildings provides for "preliminary certification" that enables an owner to take the credit for a qualifying rehabilitation even before the structure is actually listed in the National Register of Historic Places. There are no such provisions for preliminary certification in the state law for nonincome-producing historic structures.
• An owner may begin a rehabilitation project on a nonincome-producing property prior to the listing of the property in the National Register, with the intention of having it listed in the Register by the time is project is completed. However, because listing of a property by a desired deadline cannot be guaranteed, owners are strongly advised to secure National Register listing of their nonincome-producing property prior to beginning a certified rehabilitation.

  A property is listed in National Register of Historic Places by a nomination, which is a research report prepared according to detailed state and federal guidelines. The final authority on National Register listing is the federal Keeper of the National Register in Washington, D.C. In its role as administrator of the National Register program in North Carolina, the N.C. State Historic Preservation Office is charged with ensuring that nominations forwarded by the State Historic Preservation Officer to the Keeper are complete and correct. The State Historic Preservation Office provides direction to preparers but does not write nominations. Most nominations are prepared by private consultants [this list is in Adobe Acrobat Reader format] hired by property owners, local governments, or private non-profit organizations. The nomination process typically takes a minimum of six months, and may take much longer.

• The rehabilitation of the historic structure must be substantial. For income-producing properties, the rehabilitation expense must exceed the greater of the "adjusted basis" of the building or $5,000 within a 24 month period or a 60 month period for phased projects. For nonincome-producing properties, the rehabilitation expense must exceed $25,000 within a 24 month period.
• All rehabilitation work must meet the Secretary of the Interior's Standards for Rehabilitation. Applications for income-producing structures are subject to a joint review by the N.C. State Historic Preservation Office and the National Park Service, with final authority resting with the National Park Service. Applications for nonincome-producing historic structures are reviewed solely by the State Historic Preservation Office. Rules for the application and review are promulgated by the North Carolina Historical Commission.
• The credits cannot be claimed against the cost of acquisition, new additions, site work, or personal property. Only costs incurred in work upon or within a historic structure will qualify. Interior work such as HVAC work and kitchen and bathroom remodelings will qualify if the work meets "The Secretary of the Interior's Standards for Rehabilitation."
• Property owners are strongly advised to consult with the State Historic Preservation Office before beginning a rehabilitation to resolve potential design and rehabilitation problems that could result in denial of the credits.

For applications and further information, contact

David Christenbury, Preservation Architect and Nonincome-producing Tax Credit Coordinator
Restoration Branch, N.C. State Historic Preservation Office
Office of Archives and History
4617 Mail Service Center, Raleigh NC 27699-4617
Telephone 919-807-6574  Fax 919-807-6599
email david.christenbury@ncdcr.gov

For information about the National Register of Historic Places and the requirements and procedures for listing, contact

Claudia R. Brown, Branch Supervisor
Survey and Planning Branch, N.C. State Historic Preservation Office
Office of Archives and History
4617 Mail Service Center, Raleigh NC 27699-4617
Telephone 919-807-6573 Fax 919-807-6599
email claudia.brown@ncdcr.gov