Historic Districts in the City Center
The City of Birmingham has created several historic districts that are listed on the National Register of Historic Places, many of which are in the City Center. There are contributing and non-contributing buildings within these historical districts. A contributing building is a building, structure or site within a Birmingham Historic District that is of importance to the City, State, region or Nation because it imparts artistic, historic or cultural values. Contributing buildings are eligible for lucrative rehabilitation tax credits.
A non-contributing building is a building or structure within a Birmingham Historic District that may have been constructed after 1936 or it may have been altered so that its historic qualities are substantially diminished. Non-contributing buildings are not eligible for tax credits.
Click here for a map of Historic Districts in the City Center
Federal Historic Tax Credits
If a building is a designated historic property, it is eligible for a 20% rehabilitation tax credit. (ONB can help you determine whether or not your project qualifies). The tax credit is a "dollar for dollar" credit against your federal income tax equal to 20% of the cost of renovation. In order to qualify, an owner must "substantially renovate the property", i.e. spend an amount greater than the adjusted basis of the building. The adjusted basis of a newly acquired property is the value of the property minus the land value. Most expenses directly related to the rehab are deductible including labor, materials, and most soft costs.(Acquisition costs are not deductible.)
The tax credit is subject to approval by the Alabama Historical Commission. ONB’s Historic Preservationist Pam King is available to assist with your Part 1 application. Call 324-8797 ext. 16 for details or click here to e-mail your question or request.
Example:
Cost of Eligible Improvements………………. $1,000,000
Value of Historic Credit…………………...…… $200,000
NOTE: Although the credit can be carried forward 15 years and rolled back 3 years, there are restrictions on its use by individuals. The Historic Tax Credit is subject to a 5-year hold period. Be sure to consult your accountant for specific details.
Commercial Revitalization Districts
The City of Birmingham has created Commercial Revitalization Districts in an effort to renew and revitalize designated areas into vital business and cultural districts within the city. Some of the general goals of the Revitalization program include improving the infrastructure of the districts, making the areas safer places to live and work, decreasing building vacancy, preserving any culturally or architecturally significant buildings within the districts, improving the aesthetic appearance of the areas through landscaping and other activities, and making the areas more attractive overall to potential businesses or residents.
The districts provide the city with design review authority and other powers and incentives to achieve goals for the revitalization of a district. The beneficiaries of improving and rehabilitating these districts are not only existing residents and businesses within the areas, but the city as a whole.