Getting Historic Tax Credit

What it is:

If you complete a certified rehab project on your home, you can get back up to 30% of the money you spend in fixing your historic home.  The money comes as a credit applied to your state tax bill.  And starting this year it is fully refundable.  That means if you qualified for and were allotted a $4,000 tax credit in 2010, you would note that on your state tax return for the year and get that full amount back–even if you owed less than that amount in state taxes this year.

It is an “up to 30% credit” because the state has a $5 million pool each tax year.  If they get requests for credits totaling more than this amount, it is divided between each applicant.    (This year was the last year with a $3 million cap and homeowner applicants were allotted about a 20% credit.  A $20,000 project would have earned a $4,000 credit)

Goal of the program:

The goal is to encourage owners of historic homes to return or keep them in good repair so that the homes and their neighborhoods continue to make our communities interesting, unique places to live.  Repairs should be done in a way that respect the existing original design and materials of the home.   The KY Heritage Council is the state agency tasked with reviewing and certifying projects.

How You Qualify:

1)    Your home must be located in a National Register District.  All homes in the Fountain Avenue Area that are south of the middle of Madison Street (including the south side of Madison, both sides of Monroe, and the 200-300 blocks of Harahan, N 16th, and Fountain Avenue) are in the existing Jefferson Street  District.

2)    Your home must be a contributing part of the National Register District. In general, this means that your house must be 50 years old and not radically changed from its historic appearance.

3)    Your rehab project must expend at least $20,000 over a 2-year period.  All expenses related to improvements in your home are eligible for the credit.  (Expenses for new additions and for sidewalks, landscaping, and other sitework are not eligible.)

4)    Your project must be certified by submitting a 3-part application to the KY Heritage Council.   Parts I and II are usually submitted at the same time.  Part I shows that your house is a contributing part of the historic neighborhood.  It includes a couple of paragraphs of descriptions along with photos and a sketch of your home’s floorplan.

Part II explains the work you intend to do in your project.  The form asks you to list each item in the house that you’ll be working on, describing what it looks like now and what work you plan to do.  KY Heritage Council staff will review this information and make sure that the work you plan respects your home and does not replace historic elements that are in good shape.

Once you have Parts I and II approved, you do the work.  When it’s complete you send a set of “after” photos and a sheet summarizing your expenses for review.  After review, the KY Heritage Council issues the credit, which you will claim on your taxes.

More Information:

§       If you think you might want to take advantage of the credit,  Sharon Poat of the Midtown Alliance of Neighbors can answer your questions and help you through the process.  Call 442-8947.

§       More info is available on the KHC website–www.heritage.ky.gov.

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Paducah, KY