The Texas state historic preservation tax credit program




Hudson, Anna Rose

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Across the country more and more states are taking advantage of the economic value of state historic tax credits that can be used in conjunction with federal rehabilitation tax credits to incentivize significant investment in the rehabilitation of buildings. Texas joined thirty-three other states when it passed a state historic tax credit in 2013. The financial incentives of this new piece of legislation are expected to spur the rehabilitation of historic buildings in large cities and small towns across the state. In order to be a successful statewide program the tax credit must be an attractive financial incentive for not only sophisticated investors, but also for small building owners with no previous tax credit or rehabilitation experience. The tax credit creates a new market of buyers and sellers, drawing the attention of local and national real estate developers and investors. The ability to combine state and federal historic tax credits changes the bottom line in real estate pro formas, leveraging historic buildings as assets. The availability of the tax credit for small preservation projects may have the greatest impact on historic preservation efforts across the states as smaller towns begin to see new investment in downtown commercial districts. This report explains how the tax credit was created, analyzes the strength of the policy, and makes recommendations for its implementation and use. This work addresses a series of important questions. Will the Texas Historic Preservation Tax Credit be an effective economic driver as compared to other state historic tax credits? What are the strengths and weaknesses of the Texas tax credit? This report analyzes the new Texas program and gages its potential to incentivize the rehabilitation of historic properties in a range of sizes and locales.



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