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FAQ Tax Incentives

Frequently Asked Questions

What is the purpose of preservation tax incentives?
The tax incentives were designed to encourage the continued use of historic properties through rehabilitation. There are three different types of tax incentives available to owners who plan to rehabilitate their historic buildings. The federal Rehabilitation Investment Tax Credit is available only to properties that will be used in an income-producing capacity after rehabilitation- for commercial, professional, or residential rental purposes. The Georgia Preferential Property Tax Assessment and the State Income Tax Credit for Rehabilitated Historic Property are available to both private residential properties as well as income-producing properties.

How do I know if my property is eligible for tax incentives?
The property must be a "certified structure," which means it must be listed in, or eligible for listing in, the National/Georgia Register(s) of Historic Places, either individually or as a contributing structure in a National/Georgia Register historic district.  The Historic Preservation Division must certify the rehabilitation.  If your property is eligible, but not yet listed in the National/Georgia Registers, you must pursue getting it formally listed.

If I want to rehabilitate an income-producing property, what incentives are available to me?
-a 20% tax credit of qualified rehab expenses on your federal income tax (no cap)
-a 25% tax credit of qualified rehab expenses on your state income tax, capped at $300,000
-a property tax assessment freeze for over 8 years

What is the application process for an income-producing property?
You could also apply for the federal program, which is a three-part application. The Part 1 confirms the property's historic significance. The Part 2 tells us in detail about your planned rehabilitation. The federal Parts 1 and 2 correspond to the Part A for the state programs; and Part 3 corresponds to the Part B of the state application. Parts 1 and 2, and Part A start the review process at the beginning of your project. After review of the federal applications, we forward our recommendation with your application and materials to the National Park Service. NPS then completes its own independent review and will directly send you its certification decision.

If I want to rehabilitate my primary residence, what incentives are available to me?
-a 25% tax credit of qualified rehabilitation expenses on your state income tax, capped at $100,000
- an property tax assessment freeze for over 8 years

What is the application process for my primary residence?
There are two parts to the application process. First, you should submit a Part A application prior to beginning work. In the application, describe the current condition of your property and then explain what you plan to do to the building. You also need to submit photographs of the property to help us more accurately understand your rehabilitation plans. Once HPD reviews the application, we will send you a certification decision for your proposed project. When the rehabilitation is completed, submit a Part B application with photographs showing that the work was completed. We will review this and send you the final certification decision.

How are tax incentives projects evaluated?
Rehabilitation work must follow the Secretary of the Interiors Standards for Rehabilitation, or, for the state programs the corresponding Department of Natural Resources Standards for Rehabilitation. These standards were developed to guide the review of work undertaken on historic buildings. The overall purpose is to provide direction for adapting a historic building for modern living while maintaining its historic character and integrity, and retaining as much of its historic fabric as possible.

How much money do I have to spend on the rehabilitation work?
That depends on how much the building is worth before it undergoes the rehabilitation. The three different tax programs each have slightly different requirements for meeting the substantial rehabilitation test. This is the formula used to determine if enough money was spent for the project to qualify as a rehabilitation for the purposes of these programs.

What fees are involved for applying for tax incentives?
The fee schedule is based on a percentage of the qualified rehabilitation expenditures (QRE) that establish the amount of income tax credit allowed for a certified rehabilitation project. The fee amount is one-half percent (0.005) of the first $500,000 in QREs, plus one percent (0.01) of any QREs over $500,000. The fee is nonrefundable and is collected in two installments: 75 percent at Part A – Preliminary Certification application -- and 25 percent at Part B – Final Certification application. HPD will bill the owner when the applications are received and project review will only begin after payment is received. The minimum fee is $250 (for projects with QRE of $100,000 or under) and the maximum fee is $10,000. For projects with an acceptable Part A application received prior to January 1, 2016, that are completed after January 1, 2017, only the Part B fee portion of the new fee schedule will be charged. If you are only participating in the Preferential Property Tax Freeze program, the fee is $50. If you are participating in both the Preferential Property Tax Freeze program and the State Income Tax Credit Program, the $50 fee is waived. Only Cashier’s Checks or money orders are accepted and must be made payable to the Georgia Department of Natural Resources. Additionally, federal projects must pay a separate fee to NPS for that agency’s review. The federal fee is based on the actual dollar amount of the rehabilitation.

When should I submit my application to HPD?
Ideally you should submit your application before beginning work. This allows HPD to alert you to any potential problems. However, HPD will still review projects that are ongoing or even completed. It is important to understand that if your project is already underway, any work that was done prior to our involvement is still reviewed. If work does not meet the Standards for Rehabilitation, this could result in a denial of the project.

For the State Preferential Property Tax Assessment program, your approved application (Part A) needs to be sent to your county tax assessor as early as possible in order for your assessment to be frozen at its pre-rehab value.
Is there a process that tracks the state income tax credit for rehabilitation of a historic home?
Yes, the tax incentives coordinator and the tax specialist log in all applications on a database which is queried to respond to questions regarding all tax incentive programs.

Is there a way to know how many houses are rehabilitated by using the tax credit rather than being left to deteriorate?
Yes, an annual report on the state income tax credit is prepared for the legislature every year. This report is available to anyone upon request.

Are there any studies done to determine if a tax credit is a worthwhile avenue to utilize our tax dollars in this economic slowdown?
Yes, the use of tax incentives has been proven by many economic studies to have leveraged many times its cost in private expenditures on historic preservation. Tax incentives help create viable life for abandoned and derelict buildings. Historic rehabilitation generates jobs, enhances property values, creates affordable housing, and augments revenue for local governments. It has been proven that for every $1 dollar spent in historic rehabilitation expenditures, $5 is returned to the local economy.