Last edited 29 Jan 2021

Main author

Institute of Historic Building Conservation Institute / association Website

Tax Relief for Heritage: Lessons from abroad

This article is as an annex to VAT Policy for historic buildings.

It was written by Bob Kindred MBE BA IHBC MRTPI from The Institute of Historic Buildings and originally published in May 2014 as Policy regarding Value Added Tax (VAT) on historic buildings.



In the United States and Canada, a heritage building tax credit scheme operates through the National Parks Service. This enables developers to claim a tax credit on completed refurbishments (for social housing or restoring derelict/empty buildings) and provides a targeted rather than universal reduction which some in the sector have been calling for. [37]

United States

The Rehabilitation Tax Credit was established in 1986 and applies to costs incurred for rehabilitation, renovation, restoration, and reconstruction of historic buildings. The percentage of costs used as a credit is 10% for buildings in operation before 1986, and 20% for listed buildings. The credit is available to any person or entity that holds the title for an income producing property. [38] [39]

Expenses that qualify for the credit include those for the structural components of a building, eg walls, partitions, floors, ceilings, tiling, windows and doors, air conditioning and heating systems, plumbing, electrical wiring, chimneys, stairs, and other components related to the operation or maintenance of the building. Additionally, ‘soft’ costs (such as those under the UK Listed Places of Worship Grant scheme such as architect or engineering fees also qualify for the credit. In addition to the federal tax incentive, some 30 States in the USA have some form of heritage tax incentive programme.

The United States Secretary of the Interior established 10 Standards for Rehabilitation, which projects must meet to be eligible for the 20 percent Rehabilitation Tax credit.

They are:

  • A property shall be used for its historic purpose or be placed in a new use that requires minimal change to the defining characteristics of the building and its site and environment.
  • The historic character of a property shall be retained and preserved. The removal of historic materials or alteration of features and spaces that characterize a property shall be avoided.
  • Each property shall be recognised as a physical record of its time, place, and use. Changes that create a false sense of historical development, such as adding conjectural features or architectural elements from other buildings, shall not be undertaken.
  • Most properties change over time; those changes that have acquired historic significance in their own right shall be retained and preserved.
  • Distinctive features, finishes, and construction techniques or examples of craftsmanship that characterise a historic property shall be preserved.
  • Deteriorated historic features shall be repaired rather than replaced. Where the severity of deterioration requires replacement of a distinctive feature, the new feature shall match the old in design, colour, texture, and other visual qualities and, where possible, materials. Replacement of missing features shall be substantiated by documentary, physical, or pictorial evidence.
  • Chemical or physical treatments, such as sandblasting, that cause damage to historic materials shall not be used. The surface cleaning of structures, if appropriate, shall be undertaken using the gentlest means possible.
  • Significant archaeological resources affected by a project shall be protected and preserved. If such resources must be disturbed, mitigation measures shall be undertaken.
  • New additions, exterior alterations, or related new construction shall not
  • destroy historic materials that characterise the property. The new work shall be differentiated from the old and shall be compatible with the massing, size, scale, and architectural features to protect the historic integrity of the property and its environment.
  • New additions and adjacent or related new construction shall be undertaken in such a manner that if removed in the future, the essential form and integrity of the historic property and its environment would be unimpaired.


There are currently four kinds of tax relief to encourage historic building conservation the most interesting of these being property tax credits. These compensate the owner of listed buildings for the costs of a restoration or rehabilitation project. Rather than providing a grant for project costs, the local authority provides a once-only credit on property taxes.

In addition there are Property tax abatements, which compensate the owner for any increase in property taxes on a listed building following a successful restoration or rehabilitation project, spreading the resulting tax increase over several years; property tax relief, which rewards the owner of a listed building by providing a fixed percentage reduction in property taxes and as long as the owner continues to conserve it the tax relief can be made; and finally, sales tax grants and rebates.

These provide relief from provincial sales tax on materials and labour used for heritage conservation projects but only one province (Nova Scotia) currently uses this and the amount of the grant and rebate is limited to the 8% of the provincial sales tax.

--Institute of Historic Building Conservation 08:22, 14 Jun 2016 (BST)

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