Funding for Privately Owned Historic Resources

A consistent inquiry received by Preservation Virginia regards the availability of funding for the preservation of privately-held historic properties. Unfortunately there’s no easy answer to this question, as a perennial fund for preservation does not exist outside of foundation support for nonprofit organizations. However, there are some options that may help in addressing the need for funding to preserve the many privately-owned irreplaceable historic resources in Virginia:

Department of Historic Resources and the National Park Service
Virginia’s Department of Historic Resources does not have a grant program for private home owners, however there are opportunities funded by the National Park Service and/or FEMA that are often administered by DHR. For example, if your historic building suffers damage from a natural disaster, FEMA, the National Park Service and DHR will often host grant programs to address damage to historic resources and mitigate future problems. DHR also administers a “Threatened Sites Program” focusing on archaeological sites facing threat of destruction. These funds are strictly used for archaeological documentation. The National Park Service has several grant opportunities through its Historic Preservation Fund, but these programs are often restricted to 501c3 nonprofits or government entities.

Historic Tax Credit and Easement Programs
Depending on the tax situation of property owners, historic tax credits could allow for a significant return on investments made through tax alleviation. Certified rehabilitation of a historic building through the Virginia Department of Historic Resources can be eligible for an income tax credit on 25% of eligible expenses through the Virginia Rehabilitation Tax Credit Program. An additional 20% credit can also be used through the Federal Rehabilitation Tax Credit Program, though those properties must be income-generating businesses, not private homes.

Easements allow for property owners to continue ownership while seeing historic buildings and landscapes preserved for future generations. The benefits to easement donation include federal charitable gift deductions of up to 50% of adjusted gross income, which may be carried forward for an additional 15 years. There are also land preservation tax credits for taxpayers who donate a conservation easement with a Virginia state income tax credit equal to 40% of the value of the easement. This results in a dollar-for-dollar reduction in tax liability. Also, placing a conservation easement on historic properties may result in a reduction of estate taxes.

Local Tax Incentives
Some localities offer qualified historic properties partial local property tax exemptions or abatements. Check with the city or county in which you reside.

Some private homeowners may be eligible for renovation loans, such as the FHA 203K rehab loan. The Department of Housing and Urban Development’s Section 203(k) insurance enables homebuyers and homeowners to finance both the purchase or refinancing of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home. Read more about the types of properties and projects eligible on the Department of Housing and Urban Development’s website.

Establishing a 501(c)3 Nonprofit and Grant Programs
The creation of a nonprofit entails significant work on the front end, including the setting up of a Board of Directors to coordinate the new organization, but doing so then allows for contributions to be made toward preservation work. For example, there are many public and private foundations that make donations and grant awards to historic sites and museums. However, in most cases these locations must be open and accessible to the public and used for education purposes.

The Future of Preservation Funding
Each year, Preservation Virginia actively fights for the continuation and expansion of historic tax credit and easement programs.

In the long term, Preservation Virginia made it a priority in its Vision 2020 Comprehensive Fundraising Campaign to create a community action fund, which would allow us to make grants or loans to property owners in Virginia. However, it may be years before such a program is in place, so for now, property owners must explore the options listed above for their preservation purposes.