Upgrading an historic property? Financing help exists

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Ask a Lender
January 10, 2017 | Updated September 21, 2017


Key Points

Purchasing and upgrading a historic home

  • Look into the requirements set by the National Register of Historic Places.
  • State and local historic preservation boards have their own restrictions.
  • Grants and tax credits can help you upgrade a historic home.

While it can be difficult to resist the charm of a historic home, such homes often come with their own share of special headaches — such as a propensity for structural problems because of their age, coupled with strict rules dictating which repairs you can or can’t make.

Using home equity is a common way to finance home upgrades. When comparing lenders, research what special financing might be available for fixing up a historic home. Because communities strive to preserve historic properties, opportunities also exist to help you pay for renovations. Many grant and funding options are only available to nonprofit organizations, although other benefits, such as tax credits, may be available to prospective homeowners.

Historic definition

Homes are deemed “historic” by either the National Register of Historic Places — the nation’s official list of historic places, administered by the National Park Service — or by a local historic preservation board.

You can check with the register to see if your prospective home is already on the list. If you already own a home that’s not on the register, you can apply to have it added — but note that the process usually starts by reaching out to a state-level historic-preservation organization.

Tax credits

State historic-preservation offices may have programs that offer tax credits or other financial incentives. The National Park Service provides a list of all state historic preservation boards on its website.

It’s a good idea to see what restrictions state or local governments place on historic properties to make sure they won’t prevent you from making any wanted or needed renovations to the property.

Additionally, the NPS and Internal Revenue Service offer the Federal Historic Preservation Tax Incentives Program, which is a 20 percent federal tax credit for the rehabilitation of historic properties. To qualify, however, the property must be used for a business or another income-producing purpose.

This could still include a primary residence if it generates income — for instance, if you have a home office, or if you rent out part of your home. The renovations also must be approved by the Secretary of the Interior to ensure they are “consistent with the historic character of the property.”

Other federal tax credits can be used in preservation projects in combination with the historic preservation tax credit, according to the Advisory Council on Historic Preservation, a federal agency that advises Congress and the president on historic-preservation policy. There is a federal tax credit for acquisition, construction or rehabilitation of low-income housing, for example, which could include historic properties.


Because the goal of historic preservation boards is to preserve the historic qualities of the home, homeowners must be prepared to accept certain conditions and restrictions. This can include prohibitions against building an addition to the house; only replacing features such as windows, shutters and roofs with the same kinds of materials; paying higher taxes in historic neighborhoods; or paying more for utility services because it’s more expensive to heat or cool the home.

Living in a historic home can be a great way to connect to the past and revitalize a piece of local history. But there’s no need to take on the full cost of renovations if you can get some help to do so. State and local governments want to preserve the historic properties in their jurisdictions, and you can use this desire to your advantage with a little research.

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