Cost of Historic Home Renovation
Historic home renovation prices are far higher than what you would pay for an existing conventional home when buying and renovating one.
You may be eligible for several grants, loans, and tax credits to help cover the cost of the home purchase and, if applicable, the cost of restoring your new home.
Grants for Historic Homes Renovation
Many historic home renovation grants are only open to nonprofit organizations and public properties/groups, which is unfortunate.
However, as a private owner of a historic home, you might be able to find grant money from various outlets, including philanthropic organizations, on a local, state, or national level.
First, start your search for grants in your region by contacting a local National Trust for Historic Preservation office or your State Historic Preservation Office for more information. Also, go to RateChecker for a list of grant opportunities.
The eligibility criteria for grants can vary greatly depending on the program and the guidelines.
Loans for Historic Home Renovation
Of course, grants are not the only way for historic home buyers to get money. You may also apply for a renovation loan to help you restore and make the home livable again.
An FHA 203k rehab loan is one of the most common choices. Fannie HomeStyle Renovation loan or Freddie Mac’s CHOICE Renovation loan are good options for buyers who can put down 20% or more for historic home renovation.
Like the 203k program, these traditional loans enable you to combine purchase and renovation costs into one loan.
Another alternative is a HUD-backed Title 1 loan, which allows you to borrow up to $25,000 for minor repairs and is backed by the Department of Housing and Urban Development (HUD).
Options for Home Equity Loans
Other loan options can be available if you own a primary residence and buy a historic house as your investment property or second home.
You may want to consider taking out a loan against the equity of your current home to help pay for a historic home remodel. If that is the case, consider the following:
You may also look at an unsecured personal loan that does not require you to put your primary residence up as collateral.
Historic Homes Are Eligible For Tax
Most states provide a tax break to people who want historic home renovation. In reality, some states offer homeowners a 25% bonus credit, while others give a credit if the property increases income.
The federal Historic Rehabilitation Tax Credit (HTC) offers a credit of 20% of eligible costs on a historic home rehab. That will result in income-generating rental property, which is one of the most generous tax credits available.
The 10% restoration credit; which provides a 10% tax break based on the expense of repairs that retain your historic structure’s original character, is another potential tax incentive. The property must have been constructed before 1936 and used to house your company before you apply.
You can freeze your property taxes if you work closely with your local or state historic preservation office.
Historic Home Renovation Can Pose Some Difficulties
Regardless of the type of financing assistance, you qualify for historic home renovation; keep in mind that there might be limitations to the types of renovations you may do.
Since most historic homes are at least a few decades old, Bigach advises, “Keep in mind that they may take a lot of work.”
“You could run into electrical issues, water damage, or structural problems if it wasn’t properly maintained. This is why it’s important to have a trusted and professional home inspector thoroughly examine the property before purchasing.”
Are there any other difficulties with the historic home renovation? Lead-based paint was used in homes constructed before the mid-1970s, and it must be discarded or encapsulated. Before signing up, you should have the property thoroughly inspected to ensure that you completely understand the extent and cost of necessary repairs.