Renovate and Get a Tax Credit
In Arlington County, 17 neighborhoods and most of the ten garden apartment complexes built before 1954 are listed in the National Register of Historic Places (See the county website for the whole list). Most of the buildings, condos, and townhouse units in these National Register nominations are listed as “contributing” buildings, so all are eligible to be considered certified historic buildings and meet the first qualification for being eligible for the state tax credit for the restoration/rehabilitation of historic buildings.
- All the buildings in Arlington Village, for example, are listed in the National Register of Historic Places and the Virginia Landmarks Register, making them “certified historic buildings.”
The Commonwealth of Virginia has a tax credit for “certified historic building” owners who rehabilitate their property. You can use these tax credits to meet the requirements outlined below.
Beyond the “certified historic building” requirement, there are other criteria a property owner must meet to qualify for this Virginia tax credit:
- The amount of money spent on the rehabilitation (including architecture and engineering fees, contractor fees, and materials) must amount to a sum equal to or greater than 25 percent of the value of one’s home. Look at your latest Arlington County real estate tax assessment and find the center column (labeled “improvement”), which is the assessed value of your property. You want the value of the building minus the value of the land. Divide this figure by 25 percent, the amount you must spend on rehabilitation to qualify. This tax credit does not include credit for the cost of additions, kitchen appliances (stove, refrigerator, dishwasher, washer/dryers), or landscaping. It does include all walls (interior/exterior), ceilings, floors, roofs, HVAC, electrical and plumbing, bathroom fixtures (toilets, sinks, tubs/showers), and kitchen cabinets.
- You must fill out three forms for the Virginia Department of Historic Resources, the state agency charged with approving all projects for which owners are applying for a tax credit based on rehabilitating a historic building. All applications must also include floor plans, design plans (if applicable), and “before” and “after” photos of the exterior and all interior spaces. However, the state charges for its review, albeit a nominal fee.
The Virginia Department of Historic Resources can assist you with photographing and filling out the forms. They can also inform you of what will and will not be possible for a state tax credit in a review of your proposed project.
The Department of Historic Resources takes a rigorous view when looking at changes to historic buildings. It is advisable to start applications after their staff approves. Arlington County’s Historic Preservation Program staff can advise and guide you through the process or at least guide you to consultants who can do this work. And, of course, if applicable, you must get your structure’s Covenants Committee approval for any structural changes to your unit.
For more information, visit the Virginia Department of Historic Resources website under tax credits: https://www.dhr.virginia.gov/tax-credits/.