There are a number of tax incentives, grants and more that can help you meet your financial goals while moving through a historic preservation project. Below is just an overview of some of the incentives; contact Simo Community Design to learn more about  which ones may be the best fit for your project.

Tax Incentives
Tax incentives are supported not just by historic preservation groups, but by developers, architects, economic development professionals and city officials as a way to spark new job creation and business activity by using one of Georgia’s most unique assets: its historic buildings.

There are two main tax incentives most people restoring a historic property use: federal and state tax incentives.

State Tax Incentives: More than 30 states offer some form of state tax credits to encourage the redevelopment and preservation of qualifying historic buildings, and these vary by state.

In Georgia, a state income tax credit equals 25 percent of the project’s Qualified Rehabilitation Expenditures (QREs) and a property tax freeze for 8 1/2 years.

Federal Tax Incentives: This is equal to 20 percent of the project’s QREs. Or, the owner may make a charitable contribution deduction taken in the form of a conservation easement.

To obtain a federal tax incentive, your property must be income producing – i.e. a bed & breakfast, rental property, apartments or condominiums.

You may obtain both a state and federal tax credit for your property if it is income producing, doubling your savings. 

New in 2018: Rural Zones
The state of Georgia passed legislation in 2017 to create Rural Zones, where portions of the community are zoned to allow for tax credits. It’s a new program offering tax incentives to small businesses that invest in rural downtowns – in communities with populations of fewer than 15,000 – to renovate buildings and create jobs.

Three tax credits are part of the program:

• A job tax credit of $2,000 for each new job per year for up to five years

• An investment credit of 25 percent of the purchase price of a building (up to $125,000, claimed over five years)

• A rehabilitation credit of 30 percent of the rehabilitation costs (up to $150,000, claimed over three years).

The credits can be layered on top of one another, but to qualify for any of the tax credits a business has to create at least two jobs, either full-time or full-time equivalent – say, two part-time jobs that add up to 40 hours a week. Different businesses can benefit –  a restaurant owner, for example, could claim the job tax credits, while the investor who owns the space where the business is located could claim the investment credit and a contractor could claim the rehab credit.

The inaugural group of Georgia cities recognized with this designation includes:
• Bainbridge
• Commerce
• Cornelia
• Fitzgerald
• Jonesboro
• Nashville
• Perry
• Springfield
• Toccoa

The second round of Georgia cities was announced at the end of 2018:
• Avondale Estates
• Greensboro
• Hartwell
• Hogansville
• Jesup
• Locust Grove
• Monticello
• Sylvester
• Waycross

Each designation lasts for a period of 5 years. If your project resides in one of these cities, you may be eligible for this tax credit. You can learn more at https://dca.ga.gov/community-economic-development/incentive-programs/rural-zones.

How do Credits Work?
State tax incentives are available for owners of a historic property who carry out a substantial rehabilitation. All properties must be listed in, or eligible for, the National/Georgia Register of Historic Places, either individually or as part of the larger district. Project work must meet the Secretary of the Interior’s Standards for Rehabilitation and the Georgia Department of Natural Resources Standards for Rehabilitation. Your historic preservation consultant can help you determine how your property will adhere to these standards while also becoming the finished property you envision.

What are Qualified Rehabilitation Expenditures?
Not every expense associated with a rehabilitation project contributes toward the calculations for the 20% rehabilitation tax credit. In general, only those costs that are directly related to the repair or improvement of structural and architectural features of the historic building will qualify.

Any expenditure for a structural component of a building will qualify for the rehabilitation tax credit, including:
• Walls
• Partitions
• Floors
• Ceilings
• Permanent coverings, such as paneling or tiles
• Windows and doors
• Components of central air conditioning or heating systems
• Plumbing and plumbing fixtures
• Electrical wiring and lighting fixtures
• Chimneys
• Stairs
• Escalators, elevators, sprinkler systems, fire escapes

Expenses that do not qualify for the rehabilitation tax credit:
• Acquisition costs
• Appliances
•Cabinets
•Carpeting (if tacked in place and not glued)
•Decks (not part of original building)
•Demolition costs (removal of a building on property site)
•Fencing
•Feasibility studies
•Financing fees
•Furniture
•Landscaping
•Leasing Expenses
•Moving (building) costs (if part of acquisitions)
•New construction costs or enlargement costs (increase in total volume)
•Outdoor lighting remote from building
•Parking lot
•Paving
•Planters
•Porches and Porticos (not part of original building)
•Retaining walls
•Sidewalks
•Signage
•Storm sewer construction costs
•Window treatments
• Solar panels, wind turbines and geothermal systems that are essential to the operation and maintenance of the rehabilitated historic building (systems that produce electricity to back feed the power grid may not apply)

In addition to the above named “hard costs”, there are “soft costs” that also qualify. These include fees that would normally be charged to a capital account, including:
• Construction period interest and taxes
• Architect fees
• Engineering fees
• Construction management costs
• Historic preservation consultant fees
• Reasonable developer fees