If I qualify for a historic preservation tax credit, will I still be able to claim other state and federal tax credits?
Homeowners in NY qualify for a number of tax incentives that can lower your state and federal tax bill. If you qualify for the state historic tax credit, there are still a number of other federal tax credits you can claim, including the federal residential energy credit, and tax benefits for homeowners that install solar or geothermal energy systems on their historic buildings.
For state tax credits, you may be eligible for other tax incentives, but it's important to be aware that credits only offset existing tax liability.
If you have a large quantity of credits but a low tax bill for a year, you may require multiple years to claim your full credit amount. Castle can help identify the full range of tax credits your home may be eligible for based on your home spend, but we always encourage homeowners to work with a trusted tax professional to ensure that you are maximizing your actual credit claim in any given year.
Are there other tax benefits for investing in my historic building?
Yes! In addition to the state tax credits for rehabilitating your historic building, you may qualify for federal tax credits as part of your renovation. Improving the energy efficiency of your property usually makes you eligible for a wide range of tax benefits at the state and federal level (i.e improved HVAC or using ENERGY STAR certified building materials).
Castle can help you determine your eligibility for certain incentives, but you should always work directly with a trusted tax professional to ensure you're correctly applying state and federal tax credits when you prepare your tax filing for a year.
Do I have to meet certain standards during my renovation?
Yes, you need to follow guidelines for your renovation to maintain the historic character of your property. Most historic districts will have local boards that set standards you need to follow; if no such set of standards exist in your area, then the New York State Historic Preservation Office can provide guidance on standards you need to follow.
Most guidance is only relevant for exterior work, especially when rehabilitating things like siding, gutters, exterior trim, chimneys, and roofs. Interior changes tend to have fewer constraints, allowing you to modernize your space while completing eligible historic tax credit projects.
I claimed the state tax credit, but want to offset additional federal tax liability. Are there federal historic tax credits I can claim?
While there are federal historic tax credits that exist, these are most relevant for commercial property owners. It's also worth flagging that the investment required to be eligible for these credits tends to be more substantial (50% of the basis cost for the property). If you are renovating a personal residence, state tax credits are going to be the most relevant for you and provide the greatest tax benefit relative to the required investment of time and financial resources in to the project.
Will these credits ever go away?
It is possible that these state tax credits could be sunset in the state of New York, however there is no existing plan to take these tax benefits away from homeowners. The program is intended to support the economic development of qualifying census tract areas, and drive community development in historic districts where buildings may otherwise fall out of use due to poor conditions. As income levels shift and the need for economic develop changes in areas, an area may gain or lose their qualifying census tract designation, effectively ending their eligibility for the Historic Homeownership Rehabilitation Credit.
Federal tax credits are subject to similar risks - Congress can always get rid of a program, although it is rare that such an action will impact prior tax benefits that have been realized by taxpayers.
Can I use these credits on a commercial property?
Yes, historic tax credits can be used on commercial properties. There are a slate of federal tax credits and state tax credits available for commercial properties. Federal tax credits are built around design standards set by the National Park Service, which may require different techniques to be used when making changes to your property. The credits also require a higher minimum investment on qualified rehabilitation expenditures than the homeownership rehabilitation credit (50% of the basis cost of the property vs. $5,000 minimum investment).
Castle is focused on serving homeowners at this time; if you're considering a renovation on a historic building that will be used for a commercial purpose, we encourage you to contact the New York State Historic Preservation Office.
Can I use the NY Historic Preservation Tax Credit to flip a house?
No, you can't use the historic state tax credit for a house flip. If you receive a benefit from the state-level historic preservation tax credit for homeowners, you are subject to a 2-year recapture period; selling your home during this window will require you to pay back any claimed tax credit.
Why is this New York state tax credit so large relative to other incentives?
Historic credits tend to be larger incentives than most other tax credit programs, in-part due to the goal of state and federal leaders to encourage historic preservation, drive economic development and community development in historic districts, and provide support for property owners seeking to find an adaptive reuse for their building.
Do I need to use a specific contractor to complete the rehabilitation work to be eligible for a the New York State Historic Homeownership Rehabilitation Credit?
No, you are not required to use a specific contractor to be eligible to claim the historic homeowner tax credit. If you are completing rehabilitation work that requires specific techniques to be used, you should hire a contractor experienced in renovating historic homes. Using materials like spray foam insulation or vinyl siding is not allowed, blocking you from claiming these costs as qualified rehabilitation expenditures. The credit allows for the adaptive reuse of spaces in a home, but make sure to confirm the eligibility of a project with NY Parks through a historic credit application before beginning work.
Caste customers review their renovation plans with a member of our team as part of their onboarding to ensure that all renovation expenses are qualified and captured correctly.
Can I claim the credit if I have no New York State Tax Liability?
If you do not have a New York State Tax liability due to being an out-of-state resident, then you will not be able to claim the New York State Historic Homeownership Rehabilitation Credit.
The state tax credits for homeowners (home and barn) are both claimed as a non-refundable income tax credit, unless you make less than $60,000 in annual gross income (AGI). If your AGI is under $60,000, then you are eligible to get the credit refunded to you as a lump sum.
Can I combine the Historic Home and Barn Credits?
If you are claiming the historic homeowner tax credit, you are free to also apply for and claim the New York State Historic Barn credit on an adjacent barn structure or additional property. This credit is also a non-refundable income tax credit, and applies to historic barns built prior to 1946.
Worth noting: Historic barns do not need to be in a qualifying census tract to be eligible.
Where can I check the boundaries of qualifying census tracts?
NY Parks maintains a map that designates the boundaries of qualifying census tracts for the purposes of the credit. These were updated at the start of 2023, and some areas will lose their eligibility for the credit in 2024. If you're planning any renovations in the next 12 months, make sure to confirm your eligibility for the credit so you can submit a credit application before potentially losing your ability to claim the historic home tax credit if your census tract is set to expire.