Preserving a historic building is an investment in cultural heritage. Whether you own a Victorian cottage that needs major repairs or are restoring a mid‑century office block, the costs of rehabilitation can be substantial. This article explains how key incentives work and outlines major grant programs.
Federal rehabilitation tax credit
The backbone of preservation financing in the United States is the federal 20 percent Rehabilitation Tax Credit (RTC). Administered by the National Park Service (NPS) and the Internal Revenue Service (IRS), the RTC provides a credit equal to 20 percent of qualified rehabilitation expenses on income‑producing historic buildings. To be eligible, a project must meet four basic criteria.
Certified historic structure: The building must be listed individually on the National Register of Historic Places or contribute to a registered historic district. Owners can request certification by completing Part 1 of the Historic Preservation Certification Application.
Substantial rehabilitation: The cost of rehabilitation must exceed the pre‑rehabilitation value of the building (its “adjusted basis”). Typically the test must be met within two years, or within five years for phased projects.
Adherence to the Secretary of the Interior’s Standards: Work must comply with the Secretary’s Standards for Rehabilitation, ensuring that historic character is preserved.
Income‑producing use: After rehabilitation, the property must be depreciable and used for business, industrial, agricultural or rental residential purposes for at least five years. Owner‑occupied homes do not qualify, although mixed‑use projects can claim the credit on the income‑producing portion.
Owners apply for the RTC through a three‑part application. Part 1 documents the building’s significance; Part 2 outlines rehabilitation work and is evaluated against the Secretary’s Standards; and Part 3, submitted after completion, certifies that the work met those standards. The NPS reviews the application after the state historic preservation office (SHPO) provides its recommendation. If approved, the credit is claimed on IRS Form 3468 over a five‑year period. Unused credits may be carried back one year and forward twenty.
Tips for using the RTC
- Plan early: Consult your SHPO before committing to design decisions. Changes to historic fabric or inappropriate additions can jeopardize eligibility. Pre‑submission consultations are free and can save time later.
- Track expenses carefully: Only qualified rehabilitation expenses count toward the credit. Eligible costs generally include structural repairs, systems upgrades and restoration of historic features; new additions, landscaping and appliance upgrades are not eligible.
- Consider syndication: If you don’t have enough tax liability to use the credit yourself, you can partner with investors. Many preservation projects use a tax‑credit syndicator to monetize the credit in exchange for equity.
Save America’s Treasures grants
When tax credits aren’t enough, federal grants can provide critical funding. The Save America’s Treasures (SAT) program, part of the Historic Preservation Fund, supports nationally significant historic buildings and collections. Administered by the National Park Service in partnership with the Institute of Museum and Library Services, National Endowment for the Arts and National Endowment for the Humanities, SAT offers two types of awards:
Collections projects: Grants range from $25,000 to $750,000 and support conservation of museum collections, archives, documents, sculptures and other nationally significant artifacts.
Preservation projects: Grants range from $125,000 to $750,000 for “bricks‑and‑mortar” work on nationally significant buildings.
Both types of SAT awards require a non‑federal cost share equal to or greater than the grant amount. Funds may come from cash or in‑kind contributions and must match the federal portion dollar for dollar. Projects are selected competitively based on national significance, urgency of need and community impact. SAT grants cannot be stacked on top of other federal funds for the same portion of work, but recipients often layer them with state credits or private donations.
National Trust Preservation Funds
For smaller planning and advocacy projects, the National Trust for Historic Preservation offers the National Trust Preservation Funds (NTPF). These grants stimulate local preservation initiatives by providing seed money for surveys, workshops, feasibility studies and project planning. Key features include:
- Grant amounts: Awards start at $2,500 and generally range up to $5,000, allowing small organizations to undertake preliminary work.
- Targeted states: While the Trust accepts applications nationwide, its current round prioritizes projects in selected states. Applicants outside those states are encouraged to inquire about other programs.
- Deadlines: The Trust holds three grant rounds each year, typically in February, June and October.
- Eligibility and match: Applicants must be non‑profit organizations or public agencies. Grants require a one‑to‑one match in cash or in‑kind contributions, and recipients must become members of the National Trust’s Preservation Leadership Forum or Main Street America.
Because the NTPF focuses on planning rather than construction, many grantees use these awards to develop architectural plans or fundraising strategies that unlock larger grants later.
State and local programs
Nearly every state offers some form of tax credit or grant for historic preservation. Programs vary widely but share common themes:
- State historic tax credits: Many states provide credits of 20 to 30 percent of rehabilitation expenses for certified historic structures. Some, such as Missouri and Maryland, allow credits to be sold or transferred. State credits are often stackable with the federal RTC, meaning you can claim both on the same project.
- State preservation grants: Historic resource funds typically support surveys, planning, stabilization and restoration. Grants may target specific property types (e.g., courthouses or barns) or geographical areas. Awards usually require a cash match, with maximum amounts ranging from $10,000 to $50,000 or more.
- Certified Local Government (CLG) grants: In partnership with the NPS, states pass through a portion of federal preservation funds to local governments that meet certain preservation standards. CLG grants support surveys, ordinances, preservation plans and National Register nominations. Recipients generally provide a one‑to‑one match, and grants are capped at around $45,000.
- Local incentives: Many counties and cities offer heritage preservation grants funded by hotel occupancy taxes or general funds. These programs often require projects to enhance heritage tourism, occur at designated landmarks and follow design guidelines. Other local incentives include property tax abatements, low‑interest loans and fee waivers.
Because state and local programs differ dramatically, consult your State Historic Preservation Office to learn what is available in your area.
Other grant opportunities
Beyond SAT and the National Trust, additional national grant programs support historic preservation:
- African American Cultural Heritage Action Fund: Administered by the National Trust, this program awards grants to preserve sites important to African American history. Funds support planning, capital projects and interpretation.
- Paul Bruhn Historic Revitalization Grants: Managed by the NPS, these grants provide subawards through select state, tribal and local preservation offices to support rehabilitation of historic properties in rural communities. Projects must be listed in or eligible for the National Register and meet the Secretary’s Standards.
- Save Our Places: Several philanthropic organizations offer annual grants for endangered places, often focusing on specific themes like women’s history, industrial heritage or Route 66. Subscribing to the National Trust’s and NPS’s newsletters can help you stay informed about new opportunities.
Building your funding strategy
- Assess eligibility – Determine whether your building is historic and whether your project meets the substantial rehabilitation threshold. Consult your SHPO or a preservation consultant if uncertain.
- Sequence applications – Some grants require a determination of eligibility or project plan before you can apply. Use smaller planning grants to develop documentation and leverage that work to secure larger construction awards.
- Layer incentives carefully – Because different programs have unique match requirements and restrictions, plan how each funding source will be used. For example, pair a state tax credit with the federal RTC and use a local grant to cover planning costs. Ensure that total funding sources comply with limitations on stacking federal funds.
- Engage partners – Preservation projects benefit from a team that may include architects, contractors, tax credit syndicators and preservation nonprofits. Partners can provide expertise, cash match and advocacy.
- Tell your story – Grant makers favor projects that preserve significant resources and benefit communities. Emphasize how your rehabilitation will create jobs, spur tourism, provide housing or highlight underrepresented histories.
Conclusion
Financing a historic preservation project is a complex but navigable process. By understanding the federal Rehabilitation Tax Credit’s eligibility criteria—certification, substantial rehabilitation, adherence to the Secretary’s Standards and income‑producing use【48859033183403†L154-L186】【48859033183403†L221-L236】—owners can unlock a 20 % credit on qualified expenditures. Layering the RTC with Save America’s Treasures grants, National Trust Preservation Funds, state credits and local incentives can make challenging projects possible. Because programs have different timelines and match requirements, early planning and consultation with preservation professionals are essential. Armed with knowledge and a strategic approach, you can transform an aging structure into a revitalized asset that continues to tell its story for generations.
