Main Content

How St. Louis real estate investors benefit from historic preservation tax credit programs

The words "tax credits" with hundred dollar bills in background.

Commercial real estate developers have the unique opportunity to preserve the rich architectural heritage of St. Louis, MO while contributing to the local economy.

The City of St. Louis incentivizes developers to rehabilitate historic buildings by providing them with tax credit programs.

What are the historic preservation tax credit programs in St. Louis?

Federal Historic Tax Credits are approved by the State Historic Preservation Office (SHPO) and the National Park Service (NPS). It provides a tax credit of 20% for income-producing properties only.

State Tax Credits are delivered only by the SHPO. Both income and non-income producing properties can apply for this program and receive a 25% tax credit. This can be used in combination with the Federal Historic Tax Credit for nonresidential properties.

What properties are qualified for the tax credit programs?

To qualify for tax credits, a property should be:

  • Individually listed on the National Register
  • A contributing resource within a National Register District
  • Located in a Certified Local Historic District and serve as a contributing resource within it

The rehabilitation project for the property should have an overall project cost that reaches at least 50% of the basis of the property.

All project plans must be approved by the Missouri State Historic Preservation Office. For Federal Historic Tax Credits, approval by the National Park Service is also required. All property rehabilitation initiatives must follow the guidelines set by the Secretary of the Interior Standards for the Treatment of Historic Properties.

What are the benefits of the Federal Historic Tax Credit program?

This tax credit program is available to income producing and depreciable property including commercial, industrial, and residential rental units that are listed in the National Register. The program gives developers of these types of properties credit of 20% of the cost of rehabilitation.

The rehabilitation project must meet a minimum cost of $5,000 or the adjusted basis of the property, whichever is larger, within a 24-month period selected by a project sponsor. The time frame may extend to a 60-month period if the
development is phased.

How does one apply for the Federal Historical Tax Credit program?

First, the applicant must submit application requirements to the SHPO. At this stage the applicant may submit Parts 1 and 2 of the application:

  • Part 1: An evaluation of the significance of the property
  • Part 2: A description of the rehabilitation plans

If you plan to submit separately, make sure to send in Part 1 first. Applicants are encouraged to postpone any rehabilitation work until approval
for the preliminary application is granted.

Part 3, the request for certification of completed work, is required after the project is completed.

What are the benefits of the State Historic Tax Credit program?

This program provides income and owner-occupied properties a Missouri Tax Credit of 25% of the renovation expenses. The credits apply to commercial properties, residential properties, and other income-producing properties. It could also apply to certified historic personal residences but has a transaction cap of $250,000. Eligible applicants can also exchange or sell their tax credits.

State Historic Tax Credits can be combined with the Federal Historic Tax Credits of commercial or income-earning properties.

How does one apply for the State Historic Tax Credit program?

Before proceeding with any project work, the applicant must submit a preliminary application to the Department of Economic Development (DED). The DED and SHPO will review the project for eligibility. If approved, the applicant may proceed with the project. The SHPO will provide guidance in the rehabilitation effort.

Upon completion of the project and payment of all expenses, the applicant must submit a final application. This should include all required application materials and proper expense documentation. The DED will do an audit of the expenses along with the SHPO’s project review.

When the project work and expenses are approved, a tax credit certificate for 25% of qualified rehabilitation costs is issued and sent to the applicant. Looking to invest in St. Louis real estate? Get top-rated professional advice from Cardinal Realty Group. Call us at Call 636.225.0385 or send an email to hal(at)cardinalrealtygroup(dotted)com.