Lofty goals being met in smaller cities

Don’t think that big cities are the only good locations to develop lofts. A program that gives incentives to builders who revitalize federally registered historic properties has been the catalyst for many new loft projects in smaller cities, according to the Wall Street Journal.

The program, which is managed by the National Park Service, offers developers tax credits of 20% of costs to rehab certified historic structures. (A 10% tax credit is available for the rehabilitation of non-historic, non-residential buildings built before 1936.) Tax credits lower the amount of tax owed by the amount of the credit. A tax deduction lowers only the amount of income subject to taxes. This enticement has spurred many developers to turn buildings that had been sitting empty into many different types of properties, including new lofts that appeal to young people and those who want to live in the city center.

Many developers sell the tax credits to other entities, like finance companies and insurers, to obtain upfront funds to put toward the rehabilitation.

A certified historic structure is one that is listed in the National Register of Historic Places or is located in a registered historic district and certified by the National Park Service as contributing to the historic significance of the district. To qualify for the tax credit, a project must be approved by the park service, which requires that the rehab not damage, destroy, or cover elements that contribute to the building’s historic nature. Buildings also must be depreciable and must be put in use as commercial, industrial, agricultural, or residential-rental purposes. Not only does the tax credit help developers financially, but the history of a revitalized building can be a major selling point as well.

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