Historic District Homes Qualify for Rehabilitation Tax Credit
with Historic Preservation Specialist Gene Green of Ekman Design Studio
Historic preservation has been a key revitalization and economic development strategy in Denver for nearly four decades. Historic resources downtown and in LoDo contribute significantly to our tourism industry while our historic residential neighborhoods make living in central Denver more than just convenient, adding a strong sense of place, identity and community to our daily lives. Denver is home to more than fifty historic districts, affecting nearly 10,000 property owners. However, the majority of these owners don’t realize they are missing out on one of the great benefits of living in a designated home – the Colorado State Rehabilitation Tax Credit.
The Colorado State Rehabilitation Tax Credit is a 20 percent tax credit for projects with qualified rehabilitation expenditures totaling $5,000 or more, with a maximum credit of $50,000 per property. Qualified properties include locally designated landmarks, landmarks listed on the National Register of Historic Places or State Register of Historic Places, and contributing structures in both local, state and National Register Historic Districts. Qualifying structures must be at least 50 years old.
While only one such district exists in Park Hill, it includes more than a hundred properties. The Park Hill National Register Historic District is bounded by Montview Boulevard, 26th Avenue, Colorado Boulevard and Dahlia Street. Few owners inside the district are aware of the tax credit and even fewer understand how many home improvement projects can qualify.
So what types of projects qualify? The answer: a wide variety of home improvements you are likely to consider. Like all properties, an older home may have a leaky roof, deteriorated gutters, drafty windows, an inefficient furnace, original knob and tube wiring, rotting wood, masonry walls that need maintenance or foundation issues. These repair and/or replacement projects will typically qualify. Efforts to make an older home energy efficient and some interior upgrades that bring a home to 21st century living standards may also qualify.
Typical qualifying projects include:
-The addition of historically sensitive storm windows
-The rehabilitation of existing windows, including repairs and tightening of seals to improve energy efficiency
-Masonry repairs, including tuck-pointing, cleaning or paint removal
-Wood trim repairs or restoration
-Plumbing and electrical upgrades
-Roof repair or replacement
-Some sensitive interior renovations
It is important to note a few things that do not qualify for the credit. Perhaps, most importantly, new additions. However, this does not mean you could not choose to do an addition without the help of the tax credit, nor does it mean a historic home with a more recent addition is ineligible for the credit.
A great example of effectively used tax credits is a home in the Country Club Historic District. The owners of the home successfully applied for and used the tax credit for multiple projects. In 2009, the owners remodeled two of the home’s bathrooms. While using the historic finishes and materials as inspiration, and retaining some key original elements, the updated bathrooms include new fixtures, improved use of space and modern upgrades. Additional projects at the home included rehabilitating wood floors and repairing windows. The project also included the installation of pocket doors, found unused in the basement, as appropriate dividers in a newly opened master suite. The tax credit made it possible for this family to complete the projects at a level commensurate with the historic quality of their home and make upgrades that improved their comfort, as well as the condition, of their home.
An additional successful example is a home in the 7th Avenue Historic District. Once home to the city’s Candy Queen, over the last two years the home was extensively remodeled, including a fully updated kitchen and reconfigured bedrooms. The owners were able to take advantage of the tax credit for some phases of the project, including extensive repairs to the unique tile roof, examples of which exist in Park Hill as well.
The Colorado State Rehabilitation Tax Credit isn’t just good for your pocket book, it’s also good for the economy. Since 1991, there have been 951 tax credit projects statewide for a total of $98.5 million in rehabilitation costs. The Colorado Historical Foundation recently published the Economic Power of Heritage & Place report, which documents that 32 jobs are created for every million dollars spent on a preservation or rehabilitation project. Additionally, city studies document that property values inside historic district rise at a greater rate than in areas outside districts and indicate that there are seven times more investment in historic districts than in other areas of the city.
Applications for the Colorado State Tax Credit are reviewed by the Denver Landmark Preservation Commission (LPC), a board appointed by the Mayor and managed through the Department of Community Planning & Development. LPC staff checks to ensure that a project qualifies for the credit, and uses federal guidelines known as the Secretary of the Interior Standards for Rehabilitation to determine whether a project is sensitive and appropriate for a historic structure. Staff will also check that the rehabilitation costs are at least $5,000, that the project is completed within a twenty-four month period and that an application for the credit was submitted and given preliminary approval before the work began. The LPC staff can be reached at 720-865-2709.
It is important to note that, due to state budget constraints in the past two years, property owners can earn the tax credit but must wait to take it until the state general fund grows by at least 6 percent. This level of growth is expected in 2013, but no official determination has yet been made. However, the tax credit can be carried forward over ten years, so property owners will see the benefits of the credit despite the delay. The State Office of Archeology and Historic Preservation can answer questions about the tax credit and abeyance. Links to the city and state websites can be found at historicdenver.org/resources/tax-credits.
No one expects you to live in the 19th or early 20th century – our homes are not frozen in time. There is reasonable latitude in the tax credit guidelines to allow for 21st century upgrades and improvements that ensure the longevity of your home and its character-defining features. Plus, the tax credit makes it easier for owners of historic homes to ensure that another generation can enjoy the Denver we all know and love. As a private, non-profit organization dedicating to preserving and promoting historic places, Historic Denver, Inc., is a resource for owners of historic properties.
If you have additional questions about the tax credit program, whether your home or project is eligible, or for suggestions on contractors and vendors with experience working on historic homes, please visit our website at historicdenver.org or call our office at
303-534-5288.