More homes eligible for historic preservation tax credits

Homeowners and commercial developers pursuing historic preservation can benefit from the extension of the state’s tax credit for such projects, after bills passed both houses of the legislature this year.

More owner-occupied residential properties , such as those in Savannah neighborhoods like Cuyler-Brownville Historic District , Streetcar (formerly Mid-City) Historic District , Ardsley Park-Chatham Crescent Conservation District and Ardmore Conservation District , will be eligible for the credit, which has been extended to 2029. The legislation also adds new local historic designations starting in 2026, making the credit more widely available. Projects in revitalization zones will be extended through 2032.

But small-scale commercial preservation projects may not be so lucky, as the final bill which passed last week did not include an increase of the cap set each year for business entities, despite efforts by Rep. Ron Stephens (R-167) and Rep. Stephen Sainz (R-180) .

That worries some preservationists who would like to prioritize rural Main Street restoration projects like the one underway at Darien’s Strain Building, the state’s oldest extant warehouse, whose owners are working to convert it to a brew pub in the historic downtown. Demand from commercial developers for the historic preservation tax credits have far exceeded the annual $30 million cap for years — and state authorities are already allocating tax credits earmarked for 2026.

“That’s why we wanted more money in the program, because people with big projects are planning things further out. And so we’re really concerned about the money that we’re not going to have in ‘26, ‘27, ‘28,” said Historic Savannah Foundation ’s Sue Adler.

The historic preservation tax credits help pay for mission-critical needs like structural engineering and restoration with historically-accurate materials, tools, and specialized techniques. The Bureau of Economic Analysis shows that the return on investment is exponential — $14.41 for every dollar of tax credit.

Demand for the program by commercial developers has always been high, according to Middle Georgia State University economist Greg George. But private homeowners seeking the credits for work done on their own residences have found the red tape and bureaucracy difficult to tackle.  The State Historic Preservation Office takes an average of 202 days to approve residential tax credits, he said.

Data from the Georgia Trust for Historic Preservation shows that even though $5 million is available in any given year, only $7.2 million of the available $50 million has been used over the past decade, according to his research.

Given the growing number of historic redevelopment plans across the state, especially in Coastal Georgia, local legislators took up the issue at the start of the legislative session.

Tracking the legislation

House Bill 1116, which was cosponsored by Stephens of Savannah, would have extended the $5 million annual allocation for historic homes through 2034 and raised the $25 million annual cap to $30 million for other certified historic structures through 2027.

A substitute version of the bill offered by the House Ways and Means Committee attempted to raise the annual funding caps to $7.5 million for historic homes through 2035 and $60 million for other certified historic structures through 2029.

Stephens, along with Sainz (R-180) and Rep. Debbie Buckner (D-137), then introduced HB 1134, which would have capped the historic homes at $5 million and other certified historic structures at $60 million, and allowed owners of those larger projects to apply unused tax credits to future years, either until the credits were used up or for five years after the project’s completion, whichever came first.

Ultimately, the version of HB 1116 that passed the House February 29 and was sent to the Senate cut the annual aggregate funding for historic homes to $2.5 million, with all preservation funding ending in 2027.

The Senate offered a substitute bill, SB 496, that extends the historic home and commercial project tax credits through 2029, with revitalization zone tax credits extended through 2032, and restores the residential program funding to $5 million per year. Sen. Ben Watson from Savannah co-sponsored this version, which overwhelmingly passed both the House and Senate .

Now, Gov. Brian Kemp will need to sign the final version, which keeps existing annual caps of $5 million in tax credits each year for historic homes and $30 million for “certified structures other than historic homes.”

Which properties are eligible?

Right now, eligible “certified structures” are historic buildings or structures that must be in a national historic district, individually listed on either the National Register of Historic Places or the Georgia Register of Historic Places, or certified by the Georgia Department of Community Affairs as “contributing to the historic significance of a Georgia Register Historic District .”

After Jan. 1, 2026, the definition of “certified structures” will expand to include those which are certified by DCA as “contributing to the historic significance of a listed” National Register Historic District or Georgia Register Historic District, as well as those that have been ”designated as a historic property or contributing to a district under local law and certified by the Department of Community Affairs as meeting National Register criteria.”

The new definition also opens the door for smaller projects dotting Coastal Georgia. In McIntosh County alone, both Sapelo Island’s Hogg Hummock community and Grace Baptist Church, a historic African-American church in Darien, are on the Georgia Trust for Historic Preservation’s 10 Places in Peril list for 2024. Liberty County, which is home to numerous historic sites , has several homes and structures in dire need of preservation, according to Phil Odom of the Liberty County Historical Society .

‘Back from the dead’

Along Darien’s once-sleepy main street , the benefits of tax credits can be seen as construction crews restore and remodel the Strain Building. The rare two-story tabby warehouse — the oldest still standing in Georgia — survived the burning of Darien , which leveled the town during the Civil War. If the new owners have their way, the building will become a brewpub, event space, and museum and draw life into the historic city.

“It was like, ‘Look what’s happening because of this building,’” Preservation Director Ben Sutton of the Georgia Trust for Historic Preservation said, referring to the lobbying he and other preservationists did for extending the tax credit program.

Such preservation projects can cost millions. The Strain Building , for example, has survived multiple fires and decades of neglect. “It’s amazing. It is bringing a building back from the dead,” he said. “That would not happen without tax credits.”

Sutton said work on the site has uncovered “thousands” of artifacts from prehistoric times forward, which are being cleaned, preserved, and cataloged at the Coastal Georgia Historical Society .

Marion Savic, who along with husband Milan owns the building, says that collection will be displayed on a rotating basis on the second floor.

Project engineer Greg Jacobs of Landmark Preservation LLC, which has been largely responsible for preserving parts of historic Savannah, said he’s grateful the bill passed.

In his travels around the state, he’s seen firsthand “plenty of projects that won’t happen because there’s not any sort of economic stimulus and not even eligibility for the tax incentives,” which can “make or break” commercial projects like the old Savannah Power Plant in what is now the Plant Riverside District .

“If that incentive can prompt the sustainability of a project, then think about the commercial and economic viability that brings to local places,” Jacobs said.

If an owner does not have enough tax liability to use the credits allotted, Savic said, they can be converted to cash, with a third-party broker taking a percentage. That cash, she said, then goes back into the project to address cost overruns for qualified rehabilitation expenditures.

While Sutton said that neither state nor federal historic preservation tax credits can be sold outright, there is a way to leverage those credits one time only: “Developer A has a project that earns $1 million in credits, but does not have $1 million in tax liability. Wealthy investor B has $1 million in tax liability but no particular interest in historic preservation. A third-party firm can match Developer A with Investor B, where $1 million of credits are transferred to Investor B for 85 cents on the dollar, bringing $850,000 cash into the capital stack for the project. To make this legal, a project-specific LLC is created, with Developer A owning 99% of the company and Investor B owning 1%, as an example. That ownership structure has to last 5 years or risk a recapture of the credits.”

Savannah-based Cabretta Capital facilitates the transfer of historic tax credits for properties in both Georgia and South Carolina , including the Strain Building. In Georgia, whoever got the original tax credit is still responsible “in the event of a recapture, reduction, disallowance or other failure related to such credit provided the credit was properly claimed by the taxpayer,” according to the firm’s website.

Requirements

If a property passes the “ substantial rehabilitation ” test, meaning that qualified rehabilitation expenses are greater than certain values of the property, the owner can apply through DCA for the tax credit.

For owners whose principal residence is a historic home, the qualified rehabilitation expenses must exceed the lesser of $25,000 or 50% of the building’s adjusted basis . That’s the purchase price, plus the cost of necessary improvements (like new floors), minus the cost of depreciation or insurance claims (like storm damage).

If the owner’s principal residence is a historic home in a “target area,” the qualified rehabilitation expenses must be more than $5,000. For any other certified historic structure, according to DCA, those expenses must be the greater of $5,000 or the adjusted basis of the building.

In Savannah and Chatham County , areas where the historic home tax credit would be available include the Downtown Historic District , Victorian Historic District , Cuyler-Brownville Historic District , Streetcar (formerly Mid-City) Historic District , Ardsley Park-Chatham Crescent Conservation District , Ardmore Conservation District , Parkside Conservation District , Historic Carver Village/Flatman Village Conservation District , Pennyworth Island, Maridon, and Pin Point Historic District , among others .

Preserving history, Jacobs said, “shouldn’t be a debate. That’s the bottom line. It simply shouldn’t be a debate. The economic benefit for our state is quantifiable, and the benefit, not just economically but for our culture, is inordinate.”