Here’s a detailed user guide for property in a historic district, including information on where to obtain tax credits, grants, and loans.
User Guide: Buying Property in a Historic District
Definition: Historic districts are areas recognized for their historical, cultural, or architectural significance, often featuring specific regulations to preserve their character.
Designations: Properties may be listed on the National Register of Historic Places or recognized by local/state agencies.
• Historic Preservation Ordinances: Investigate local laws governing historic properties, which dictate what modifications can be made.
• Design Review Boards: These bodies review proposed changes to ensure compliance with preservation standards.
• Zoning Laws: Understand zoning regulations that may limit the property’s use.
• Exterior Changes: Most districts require approval for any exterior alterations, including renovations, painting, and additions.
• Interior Changes: Significant structural changes may also require review.
• Landscaping: Changes to landscaping and outdoor features often require approval.
A. Tax Credits
Tax credits can help offset costs associated with renovations on historic properties. Here are the main programs available:
1. Federal Historic Tax Credit
• Overview: This program provides a 20% tax credit for the rehabilitation of certified historic structures. It is aimed at income-producing properties but can also apply to residential properties that meet specific criteria.
o Eligibility: The property must be listed on the National Register of Historic Places or located in a registered historic district.
o Process: Application: Complete the application process through the National Park Service (NPS) after receiving local approval for your project.
o Form: Use IRS Form 3468 to claim the credit.
2. State Historic Tax Credits
• Overview: Many states, including Arizona, offer their own historic tax credits. Arizona provides a state tax credit for the rehabilitation of historic properties.
o Arizona Tax Credit: The Arizona state historic tax credit offers up to 25% for qualifying rehabilitation costs.
o Eligibility and Application: Similar to federal credits, the property must be certified as historic. Application details are available on the Arizona State Historic Preservation Office website.
B. Grants
Grants can provide funding for preservation projects without the requirement of repayment. Here are some sources:
1. Arizona State Historic Preservation Office Grants
• Overview: This office offers various grant programs for historic preservation projects, including planning grants and project-specific grants.
o Eligibility: Grants may be available for nonprofits, local governments, and sometimes private property owners.
o Application Process: Visit the Arizona State Historic Preservation Office website for current grant opportunities and application guidelines.
2. National Trust for Historic Preservation
• Overview: This organization offers several grant programs for preservation projects, particularly those focused on community revitalization and heritage tourism.
o Eligibility: Grants are typically available to nonprofit organizations and sometimes to individuals.
o Application Process: Check the National Trust website for details on current funding opportunities.
3. Local Preservation Organizations
• Overview: Many local organizations and foundations may offer small grants for historic preservation efforts. These can vary widely by region.
o How to Find: Research local historical societies, community foundations, or preservation nonprofits in your area.
C. Loans
Low-interest loans can help finance renovations on historic properties. Consider these options:
1. Historic Preservation Loans
• Overview: Some states and local governments offer low-interest loans specifically for the rehabilitation of historic properties.
o Eligibility: These loans often require the property to be designated as historic and may have income limits or other requirements.
o Where to Apply: Contact the Arizona State Historic Preservation Office or local preservation agencies to inquire about available loan programs.
2. Community Development Financial Institutions (CDFIs)
• Overview: CDFIs provide financial services in low-income communities and may offer loans for historic rehabilitation projects.
o Eligibility: Check with specific CDFIs for their eligibility criteria and loan terms.
o How to Find: Visit the CDFI Fund website to locate institutions in Arizona.
3. Federal Housing Administration (FHA) 203(k) Loan Program
• Overview: This program allows homebuyers to finance both the purchase of a home and the cost of its rehabilitation through a single mortgage.
o Eligibility: The property must meet FHA standards and be eligible for rehabilitation.
o Application Process: Find an FHA-approved lender who can assist with the application process.
• Neighborhood Associations: Join local historic preservation organizations to gain support and resources from community members.
• Public Meetings: Attend city council or planning meetings to stay informed about preservation efforts and community initiatives.
Purchasing a property in a historic district can be a rewarding experience, offering the opportunity to own a piece of history while contributing to the preservation of the community. Understanding available tax credits, grants, and loans is essential to offset the costs of renovation and ensure compliance with local regulations. By leveraging these resources and engaging with local organizations, you can successfully navigate the complexities of historic property ownership and preservation.
Are you ready to Buy or Sell?
Connie Ramirez, Realtor MBA
DRE# SA685069000
602-615-4166
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