Renovate Your Home and Get a Tax Credit

By Michael Leventhal, former Arlington County Historic Preservation Coordinator (retired 2013)

In Arlington County 17 neighborhoods and most of the ten garden apartment complexes built before 1954 are listed in the National Register of Historic Places (See the county website for the whole list). Most of the buildings, condos and townhouse units in these National Register nominations are listed as “contributing” buildings, so all are eligible to be considered certified historic buildings and meet the first qualification for being eligible for the state tax credit for the restoration/rehabilitation of historic buildings.

  • All the buildings in Arlington Village, for example, are listed in both the National Register of Historic Places and the Virginia Landmarks Register; making all of them “certified historic buildings.” 

The Commonwealth of Virginia has a tax credit available for owners of “certified historic buildings” who undertake the rehabilitation of their property. You can take advantage of these tax credits by meeting the requirements outlined below.

Beyond the “certified historic building” requirement, there are other criteria a property owner must meet to qualify for this Virginia tax credit:

  1. The amount of money spent on the rehabilitation (including architecture and engineering fees, contractor fees, and materials) must amount to a sum equal or greater than 25 percent of the value of one’s home. Look at your latest Arlington County real estate tax assessment and find the center column (labeled “improvement”), which is the assessed value of your property. You want the value of the building, minus the value of the land. Divide this figure by 25 percent and that is the amount you need to spend on a rehabilitation to qualify.  This tax credit does not include credit for the cost of additions, kitchen appliances (stove, refrigerator, dishwasher, washer/dryers), or landscaping. It does include all walls (interior/exterior), ceilings, floors, roofs, HVAC, electrical and plumbing, bathroom fixtures (toilets, sinks, tubs/showers), and kitchen cabinets.
  2. You must fill out three forms for the Virginia Department of Historic Resources, the state agency charged with approving all projects for which owners are applying for a tax credit based on the rehabilitation of a historic building. All applications must also include floor plans, design plans (if applicable) and “before” and “after” photos of the exterior and all interior spaces.  The state does, however, charge for its review, albeit a nominal fee.

The Virginia Department of Historic Resources can assist you with the photography and the filling out of forms. They will also be able to inform you of what will and what will not be possible for a state tax credit in a review of your proposed project.
 
The Department of Historic Resources takes a very strict view when looking at changes to historic buildings. It is advisable not to start applications before their staff gives an initial approval. Arlington County’s Historic Preservation Program staff may be able to advise and guide you through the process, or at least guide you to consultants who can do this work. And, of course, if applicable, you must get your structure’s Covenants Committee approval for any structural changes to your unit.

For more information, go to the Virginia Department of Historic Resources website and look under tax credits: https://www.dhr.virginia.gov/tax-credits/.