State Historic Preservation Office
North Carolina Historic Preservation State Tax Credits*

North Carolina preservation state tax credits, effective January 1, 1998, have made rehabilitations of historic buildings in the Tar Heel state more attractive than ever before.

The law provides:

  • 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 new state tax credit of 30% for qualifying rehabilitations of non-income-producing historic structures, including owner-occupied personal residences. There is no equivalent federal credit for such rehabilitations.

Some key points and cautionary reminders about the credits:

  • The new credits will apply only to qualified expenditures made on or after January 1, 1998.

  • 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 non-income-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 non-income-producing historic structures.

  • An owner may begin a rehabilitation project on a non-income-producing property following approval of rehabilitation plans by the State Historic Preservation Office but 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 non-income 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 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 non-income-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 non-income-producing historic structures are reviewed solely by the State Historic Preservation Office and must be approved prior to the commencement of work. Rules for the application and review procedure will be 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."

  • Rehabilitation work on non-income-producing historic structures must be approved by the State Historic Preservation Office prior to the commencement of the work!! Property owners of income-producing properties 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 State Tax Credit Coordinator
Restoration Branch
N.C. State Historic Preservation Office
Office of Archives and History
4613 Mail Service Center
Raleigh, NC 27699-4613
Telephone: (919) 733-6547
Fax: (919) 715-4801
e-mail: david.christenbury@ncmail.net

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
4618 Mail Service Center
Raleigh, NC 27699-4618
Telephone: (919) 733-6545
Fax: (919) 715-4801
e-mail: claudia.brown@ncmail.net

* Reproduced for the City of Washington Department of Planning and Development Website
from the revision of this document posted at:
http://www.hpo.dcr.state.nc.us/credits.htm
on the State Historic Preservation Office Website as of 12/11/01.
Return to: [Home]  [Planning & Development]  [Historic Preservation]
[State Historic Preservation Office Documents]