What to Know About the NY State Historic Tax Credit

The preservation of historical sites and homes is not just a nod to the past; it’s an investment in our future. The New York State Historic Homeownership Rehabilitation Tax Credit (HTC) stands as a testament to this belief– it offers  homeowners the opportunity to revive, preserve, and green their historic properties all while enjoying valuable tax benefits.

Read on to learn more about the NY State Historic Tax Credit and its importance for solar accessibility in New York City.

What is the NYS Historic Homeownership Rehabilitation Tax Credit?

The New York State Historic Tax Credit is a financial incentive designed to encourage the preservation and rehabilitation of historically significant properties. This state income tax credit, which covers a percentage of eligible rehabilitation expenses, provides a means for property owners to offset costs incurred in restoring, maintaining, and upgrading historic structures. 

This tax credit is only available for residences in qualifying historic districts and census tracts. For historic homeowners wanting to go solar in eligible areas, this tax credit covers 20% of installation costs. 

The NY State Historic Tax Credit plays a pivotal role in revitalizing neighborhoods, preserving architectural heritage, and fostering economic development.

Significance of the Tax Credit for Historic Restoration

The significance of this tax credit extends beyond monetary gains. It preserves the unique characteristics of historic neighborhoods across the city and encourages sustainable development. 

Because it’s only available in qualified census tracts, the HTC plays a huge role in making clean energy more accessible to historic, lower income neighborhoods.

What expenses are eligible for the tax credit?

Understanding which expenses qualify for this tax credit is crucial for anyone considering restoration work. Costs related to the rehabilitation, restoration, or preservation of historic properties generally qualify. Here are a few qualified rehabilitation expenses:

• Chimneys
• Windows and Doors
• Electrical wiring and lighting fixtures
• Roofs (house only, not for detached garages or outbuildings)
• Solar panels not visible from the public right-of-way

These eligible projects could range from structural repairs to specialized labor costs to sustainable home improvement aimed at preserving historic integrity.

Will it affect my eligibility for other solar incentives?

Generally, the HTC operates independently and does not affect your eligibility for other credits and rebates. In fact, when combined with other solar incentives, your project cost could be reduced by up to 95%.

If you’re interested in seeing what tax credits and rebates apply to your home when it comes to installing solar, speak with a solar specialist!

How do I qualify for the Historic Homeownership Rehabilitation Credit?

The New York State Historic Tax Credit eligibility criteria depends on the home’s historic significance as well as where it’s located. Understanding these distinctions is crucial for property owners seeking to leverage this incentive.

You can claim this credit if you:

• restore a qualified historic home in New York State
• purchase a restored qualified historic home in New York State.

A qualified historic home must be a residential structure that’s owner-occupied (including condos and co-ops) that appears on the State or National Register of Historic Places, or resides within a state or nationally registered historic district. Additionally, it should be certified as having historical significance within that district. 

Your home also must be located in:

• a federal qualified census tract or area of chronic economic distress, or
• a census tract that is at 100% or below the state family median income level, or
• a city with a population of less than one million with a poverty rate greater than 15%.

Historic Homes

For historic homes, the criteria for eligibility are centered around their historical significance and adherence to preservation guidelines. These could be residences with architectural or cultural importance, and owners must undertake rehabilitation projects that preserve the property’s historic mold while ensuring its adaptability for contemporary living standards.

Income-Producing or Commercial Properties

There are historic preservation tax credits available for commercial properties as well. These include historic buildings repurposed for commercial use, such as hotels, office spaces, or retail establishments.

However, eligibility often hinges on adhering to specific preservation standards and demonstrating how the rehabilitation contributes to the property’s historic character while serving commercial purposes.

What NYC neighborhoods currently qualify for the credit?

The NYS Historic Tax Credit has very specific qualifications, which means not every homeowner is eligible to claim it. Though the eligibility criteria does not go by neighborhoods, there are some neighborhoods in the city that have greater amounts of eligible property. If you live in one of these neighborhoods, you may qualify:

Brooklyn:

• Sunset Park
• Prospect Lefferts Gardens
• Crown Heights
• Flatbush

Queens:

• Ridgewood
• Sunnyside
• Jackson Heights

Manhattan:

•  Harlem

Red blocks show credit qualifying areas in Ridgewood, Queens and Sunset Park, Brooklyn.

Get in touch with us to confirm your home’s eligibility!

Recent Changes Affecting the NY State Historic Tax Credit Program

Qualifying Census Tracts

The location of the rehabilitated home is an important factor in determining whether you qualify to claim this credit.

It’s intended to help lower income, historic neighborhoods invest in revitalization, so the home must be located in a qualifying census tract. This is subject to change over time and can be a difference of only a few blocks – over the years, we’ve seen neighborhoods in NYC gain eligibility and others lose it. 

We can help you determine whether you qualify for the credit. Schedule a free consultation to learn more!

Expiration and Extension

Because the tax credit is part of the state’s budget, there have been discussions regarding the expiration or extension of the tax credit program. Typically, these programs have expiration dates and require legislative renewal or extension to continue. 

Luckily, in 2023, the NY State HTC was extended for five more years.

Changes in Credit Percentage

Changes made to the tax credit percentage could significantly impact the financial benefits and of the program for homeowners.

How to File for the NY State Historic Homeownership Rehabilitation Credit

Filing for the NY State Historic Homeownership Rehabilitation Credit is a multi-step process:

1. Application Process: Property owners must complete the appropriate forms and submit them to the New York State Office of Parks, Recreation and Historic Preservation. The application process involves providing details of the rehabilitation project, expenses, and adherence to preservation standards. (If you work with us to go solar, we’ll help you through this step.)

2. Project Approval: After the appropriate documents have been approved, project work can begin.

3. Project Completion & Credit Filing: Once the project is completed and certified, you’ll need to file for the credit. This will be done with your New York State income tax filing.

If you’re looking to go solar with us, we will help you through the application process.  And we’ll even send out reminders for tax season, too. Learn more about our process by scheduling a free consultation.

What is the deadline to file?

You’ll file for the New York State Historic Homeownership Rehabilitation Credit when you file your NYS income taxes. The Historic Tax Credit must be filed for the year your solar project was completed and certified.

NY State Historic Tax Credit FAQs

Is the tax credit transferable or refundable?

In most cases, the tax credit is non-transferable but can be carried forward for up to five years. Generally, it’s not refundable either, meaning if the credit exceeds the tax liability, the excess cannot be refunded – but it can be carried over to future tax years.

However, if your household adjusted gross income is $60,000 or below, the unused credit will be issued as a refund.

Are there restrictions on how the tax credit can be used?

The tax credit is typically used to offset state tax liabilities, but it cannot be applied to reduce tax below the fixed minimum tax amount. Additionally, it cannot be used to offset federal taxes or to directly cover the costs of rehabilitation.

How is my credit amount calculated?

The credit amount is calculated based on eligible expenses incurred during the rehabilitation process. Qualified expenses may include costs directly associated with the preservation or restoration of historically significant features of the property. For solar, this means that the credit will cover 20% of your project costs.

Take Advantage of the NY State Historic Tax Credit for Solar

As the landscape of historic tax credits continually evolves, seizing the benefits of the New York State Historic Tax Credit demands a clear understanding of its workings. Leveraging this incentive not only aids in preserving and upgrading historic architecture but also offers valuable financial benefits. 

When it comes to solar, this valuable tax credit is one of several incentives that can offset your project costs by up to 95% when combined. 

Want to take advantage of the NY State Historic Tax Credit and save on your electric bills? See if your home qualifies for solar with a free consultation!