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Connecticut contains multiple Historic Districts, which include just about all towns and cities in Fairfield or Litchfield county. In addition to recognizing the architectural importance of the collection of homes, and helping protect the properties from inappropriate modifications, the Historic District designation also creates opportunities for owners.
One interesting incentive is the Historic Homes Rehabilitation Tax Credit.
Tax Credit Basics
Owners of single-family through four-family homes in certain areas of Connecticut are able to apply for a tax credit to help maintain or renovate their properties. Examples of projects that may qualify for the credit include most exterior work (foundations, porches, walls, doors, windows, roof, gutters, chimney, etc.), mechanical systems (HVAC, plumbing, electrical), and interior work (structural systems, floor plans, floors, walls, ceilings, stairs, decorative elements, door/window casings, etc.).
Since Fairfield is one of the “Targeted Areas,” and so much of the area is in a Historic District, owners simply have to follow the application process and live in the property as their primary residence for at least five years after project completion in order to qualify.
The main benefit to working within the program is that a homeowner can receive up to 30% of the renovation costs back, with a cap at $30,000 per dwelling unit. Since there is also a minimum project size, the practical result is that the program targets renovations with total budgets of between $25,000 and $100,000 for a single-family home.
The “tax credit” language is a little misleading. Homeowners technically do receive a tax credit voucher at the end of the project, but it’s not one that they can apply to their personal tax liability. Only certain businesses are allowed to utilize the credits, so homeowners end up selling the vouchers and pocketing the cash independent of their tax filing.
Because the credits are not used directly by owners, they don’t receive the absolute maximum benefit. Mary Dunne, who helps oversee the program at the State Historic Preservation Office, conservatively estimated that vouchers generally sell for at least 80% (and often more) of their face value. She also noted that she has never heard of a homeowner who was unable to find a buyer among the 30+ vouchers that are distributed each year.
Applying for the Credit
The tax credit is managed through a written application that is broken down into different parts to reflect a project’s various stages. Part One simply confirms that a home qualifies for the program. The only noteworthy reason why an owner-occupied home in one of the West End Historic Districts would not qualify is that the building itself is not historic, that it doesn’t contribute to the historic character of the District.
Part Two describes the rehabilitation work in detail, capturing the current condition and articulating the proposed rehabilitation. Photos and drawings are encouraged. It is important to consider that in order for the renovation work to count towards the credit it must follow the Secretary of the Interior’s Standards for Rehabilitation. The application instructions summarize the criteria, while the website above provides illustrated guidelines for rehabilitating historic buildings. Part Two also includes the proposed project budget. Cost estimates must be from qualified pros, and qualified rehabilitation expenses are separated from non-eligible costs.
Mary said that her group is required to respond to an application within 30 days, though they try to turn them around in about 2 weeks. Ultimately it will depend on the scope and complexity of the project.
Part Three of the application is the request for certification of the completed work. In addition to demonstrating that the work was completed as planned, the other major component is the final accounting of the project costs. The tax credit is then calculated as 30% of either the approved budget or the actual expenses, whichever is less.
- See more at: http://www.amybergquist.com/blog/2011/09/15/historic-homes-rehabilitation-tax-credit/#sthash.yDNFDdoF.dpuf
Though many would-be sellers are balking at listing their homes in this post-bubble market, your home may be worth more than you think. Some cities have remained less affected than others, thanks to a variety of factors. Cities with relatively low unemployment, highly-regarded schools, and high quality of life have held steady.
Many homeowners are asking themselves if they should sell their houses now or wait. With the continuation of increased foreclosures, property values continue to decline. Given the uncertainty of the real estate sector, knowing your property value is more important than ever.
If you want to check on your home’s value, use an online home value estimator. Your real estate agent can also estimate what its worth. Getting a professional appraisal is also an option, and will usually run you between $300 and $600, depending on your home size and location.
How interesting, The Warren Group, publisher of The Commercial Record recently published that Single-family home sales in Connecticut rose slightly in September even as median sale prices fell slightly.
According to the Group, there were 2,340 single-family homes sold in Connecticut during September - that is nine more home than were sold during the same period in 2013.
Median sale prices of single-family homes in September fell by $2,000, or a little less than 1 percent, compared to a year earlier when it was at $250,000.
“September marked the sixth time this year sales have increased in Connecticut,” Cassidy Murphy, editorial director of The Warren Group, said in a statement. “Median prices continued to fall slightly but that could change once the new lending regulations fall into place, and buyers are able to afford more.”