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Tax Savings for Owners of Historic Homes
25% State Historic Rehabilitation Tax Credit

What is the tax credit and what are the benefits?

Taxpayers who rehabilitate their owner-occupied residence may be eligible to subtract 25% of the costs of many expensive repairs and renovations from their state income taxes. The South Carolina Historic Rehabilitation Incentives Act (Section 12-6-3535) benefits homeowners financially, preserves historic buildings, and enhances or local communities and the quality of life in our state.

Note:  The state law was revised on June 9, 2015. For changes, see
http://www.scstatehouse.gov/sess121_2015-2016/bills/3725.htm.

Example

An owner who meets the requirements of the tax credit program and spends $40,000 on allowable rehabilitation expenses for his home can earn:

$ 40,000    in 'rehabilitation expenses'
x     25%
$10,000     state income tax credit

Is my residence eligible for the credit?

Your building must meet both of these criteria:

1. You must own and live in the building or a portion of the building that will be rehabilitated. It can be a house or another type of historic building, such as a school or store, that you are rehabilitating to live in. A historic outbuilding associated with your residence, such as a barn or a garage, can also be eligible for the credit. The credit does not apply to buildings or portions of buildings that are used in a trade or business or produce income.

2. Your building must be one of the following:

  • listed individually in the National Register of Historic Places,
  • contributing to a listed National Register historic district,
  • determined by the State Historic Preservation Office (SHPO) to be eligible for individual listing in the National Register, or
  • an outbuilding that contributes to the significance of a property listed in the National Register.
  • Use the SC Historic Properties Record (SCHPR) and/or ArchSite(GIS) (Public View Map) to search for National Register listings.

    Who do I notify?

    Review and Approval by the State Historic Preservation Office (SHPO) is required before work begins!!! 

    Plans for the rehabilitation project must be approved by the SHPO to ensure that all work respects the historic character of the building while allowing for reasonable changes to meet today’s needs. The SHPO must certify that all project work - including expenses that are not eligible for the credit - meet the Secretary of the Interior’s Standards for Rehabilitation. When the rehabilitation is completed, the SHPO must verify that the completed project is consistent with the previously approved proposal.

    What expenses qualify for the credit?

    Money spent in the following categories may be counted as 'Rehabilitation Expenses' when calculating the amount of credit:

  • preservation and rehabilitation work done to the exterior of a historic structure;
  • repair and rehabilitation of historic structural systems;
  • restoration of historic plaster;
  • energy efficiency measures except insulation in frame walls;
  • repairs or installation of heating, air conditioning, or ventilating systems;
  • repairs or installation of electrical or plumbing systems exclusive of new electrical appliances and electrical or plumbing fixtures; and
  • architectural and engineering fees.
  • Allowable expenses do not include the cost of new construction beyond the volume of the existing building, the cost of acquiring or marketing the property, the value of an owner’s personal labor, or the cost of personal property.

    How much money must I spend to qualify?

    You must spend more than $15,000 within 36 months on 'Rehabilitation Expenses' listed above.

    When can I claim the credit?

    The credit must be taken in installments, beginning with the year in which the property is 'placed in service' (meaning the rehabilitation is complete and the building is used as an owner-occupied residence). If placed in service after June 9, 2015, the installment equals 33% of the credit amount. If placed in service after June 30, 2003 before June 8, 2015 the credit installment equals 20% of the credit amount. If your tax credit installment for a year exceeds your tax liability you may carry the unused credit installment forward for up to 5 years. You will claim the credit by submitting South Carolina Department of Revenue (SCDOR) form SC SCH. TC-22 with your state income tax return. The form is available on the SCDOR website. A taxpayer may only claim 1 tax credit on the same building within a 10-year period.

    How do I get started?

    1. Complete the S1 portion of the tax application. The SHPO will use this form to verify the historic status of the building.

    2. Download the pieces of the Application Packet or contact the SHPO to request a copy through the mail. The application packet provides tips to guide you successfully through the review and approval process.

    3. Consult with an attorney or tax specialist to advise you on the tax aspects of the program and to help you determine the effect of the credit on your tax liability. While the goal of the tax credit is to preserve historic buildings, it is also an income tax program and taxpayers must meet South Carolina Department of Revenue (DOR) requirements.


    This website does not provide legal, tax or accounting advice; the information provided is intended to be general in nature; and visitors to the website are strongly encouraged to consult their own professional tax, accounting and legal advisors on individual tax matters, or consult the SC Department of Revenue or the Internal Revenue Service (IRS). The SHPO is not responsible for the information or advice provided here as it may affect the specific tax consequences to any individual (including sole proprietor), corporate, partnership, estate or trust taxpayer, which will depend on many other facts and circumstances. The information is for the general benefit of persons interested in obtaining certifications from the SHPO that may allow them to qualify for federal and/or state historic income tax credits. Given the frequency of changes in federal and state tax laws, regulations and guidance, the information represents a good faith effort to reference controlling laws and regulations as accurately as possible.