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A
variety of special incentives are available to owners of historic
properties in Spokane/Spokane County. A brief description of each
follows.
(Federal
Legislation) A Federal income tax credit may be granted to commercial properties that are listed on the National Register of Historic Places, and on which "substantial rehabilitation" is performed. Precertification (phase 1) and completion (phase H), review and approval by the Washington State Department of Archaeology and Historic Preservation and the National Park Service, is required. Rehabilitation must comply with Federal standards for preservation of historic properties. The tax credit can be amortized. What it does: Dollar-for-dollar Federal income tax credit equal to 20% of the construction costs for rehabilitating an income-producing building; the credit may be used by the building owner or “sold” to a tax credit investor. Minimum investment: 100% of the building’s “adjusted basis”; that is, the purchase price minus the land cost and depreciation, plus prior improvements.For non-contributing properties in a National Register Historic District constructed prior to 1936, a 10% Federal rehabilitation tax credit is also available. What it does: Dollar-for-dollar Federal income tax credit equal to10% of the construction costs for rehabilitation of an income-producing, non-residential building constructed prior to 1936 (contributing properties listed on the National Register of Historic Places are ineligible). Minimum Investment: 100% of the building’s “adjusted basis”; that is, the purchase price minus the land cost and depreciation, plus prior improvements.To learn more about Federal Historic Preservation Tax Incentives, click here. Special Valuation Tax Incentive (State/Local Legislation)
Note: As of April 19, 2006, the Landmarks Commission will accept applications for Special Valuation only if the property is actually listed on the Spokane Register by the Spokane City Council at the time of application. A reduction on the portion of an owner's property tax tied to "improvements" on a tax parcel (structures), and on which "substantial rehabilitation" is performed, is also available. Eligible properties are determined by a designated local review body (Spokane Historic Landmarks Commission), and in the City of Spokane/Spokane County must be listed on the Spokane Register of Historic Places. Rehabilitation must comply with Federal standards for the preservation of historic properties and consist of 25% or more of the assessed value of the structure (not the land) prior to rehabilitation (i.e. a historic structure assessed at $100,000 must have had at least $25,000 in rehabilitation to be eligible for special valuation). “Special Valuation” is the revision of the assessed value of a historic property which subtracts, for up to ten years, such rehabilitation costs as are approved by the Spokane City-County Landmarks Commission. To be classified as eligible for special valuation, a property must first meet the following criteria:
All work must comply with the Secretary of the Interior's Standards for Rehabilitation. To view the Secretary of the Interior's Standards, click here. Step 1: Property is listed on the Spokane Register. Step 2: Property owner applies for application on proposed work then rehabilitates building in accordance with the Secretary of the Interior's Standards. Step 3: Property owner files application for Special Valuation with the Spokane County Assessor’s Office prior to October 1st. Step 4: Preservation Office meets with applicant to discuss application requirements and procedures. Step 5: Property owner files application packet/documentation for Landmarks Commission meeting (see checklist for more information) and Preservation Office processes application. For an example of the required list of expenditures to be included with the application packet, click here. Step 6: Landmarks Commission conducts public hearing on application. Step 7: If approved, Preservation Office sends approved amount to the Assessor. Step 8: Property owner sees a reduction in Spokane county property tax bill within 2 years. Deadlines to Remember
Penalty The penalty for violating the agreement or other program requirements is substantial. Violators would have to pay the following: all back taxes that would otherwise have been owed, interest on back taxes, and a penalty equal to 12% of back taxes and interest may be due. Appeal Process Any decision on the disqualification of a historic property for special valuation exemption or any other dispute may be appealed to the current year Board of Equalization by July 1st or 30 days after the disqualification, whichever is the later. Examples of Expenditures that Qualify Exterior: Windows, doors, painting, roofing; Interior: Plumbing, electrical, lighting, wiring, flooring, doors, windows; heating/air conditioning, finish work, cabinetry (affixed to the wall); Other: Architectural/consultant fees, taxes, insurance, and utilities during construction, construction administration expenses, construction phase interest expenses. Examples of Expenditures that Do Not Qualify
Application Fees: $125.00 for residential properties and $250.00 for all other properties. For a Special Valuation checklist and affidavit, click here. For a brochure highlighting this program and the application process, click here. To download a Special Valuation application, click here (complete and return to Spokane County Assessor's Office). Special Valuation Policy & Frequently Asked Questions To review HPO Special Valuation policy and frequently asked questions, click here. Have more questions? Check out DAHP's brochure on Special Valuation. Click here.
(State/Local
Legislation) This is a permanent reduction in the percentage of an owner's property tax based on land value only. A "Public Benefit Rating" is assigned by local elected officials, based on recommendations made by local review agencies. In the case of historic resources, the Landmarks Commission may contribute to the official review process. The Open Space Taxation Act, Chapter 84.34 RCW, is designed to encourage the preservation of qualified lands through the application of the current use tax assessment concept. An owner or contract purchaser may apply for the current use classification for any of the following:
It is the classification of “Open Space Land” which provides the opportunity for properties listed on the local, state, or National Register to take advantage of this particular tax incentive. “Open Space Land” refers to a) any land area so designated by an official comprehensive land use plan adopted by any city or county and zoned accordingly; or b) any land area, the preservation of which in its present use would:
In most cases, Current Use Assessment results in a reduction in the assessed value of the land, which in turn reduces taxes. The amount of reduction depends on the fair market value of the land and its use. In the case of Open Space Land, the lowering of assessed value is related to the degree of public benefit associated with the classification. Once land is classified under this Act, it shall remain under such classification until a request for withdrawal is made by the owner; until the use of the land is changed; or until the land has been sold or transferred and the new owner has not reapplied by filing a Notice of Continuance with the Assessor. The owner may request withdrawal at any time, but usually not without incurring a penalty. Applications for Open Space Classification can be obtained from the Spokane County Department of Building and Planning, 1026 Broadway, Spokane, Washington 99260. In addition, the Historic Preservation Office can provide additional information to those interested in learning more about this program.
(Federal/State/Local
Legislation) In exchange for the donation of an easement, consisting of either a portion of land or a building's facade, an owner may: a) claim a one-time Federal income tax deduction, and b) realize a permanent property tax reduction based on the value of the donated property. The easement must be granted to a qualified entity; and in exchange, the owner must agree to maintain the donated property. An easement is a legal agreement whereby the private owner gives up certain privileges with regard to controlling the appearance of his or her real property. Once imposed, it “runs with the land,” obligating future owners to abide by its terms and thus providing effective long-term protection for an historic property in private ownership. In addition, preservation easements can offer potentially significant federal income, estate and gift tax consequences. The preservation easement may be drafted to prohibit alterations to significant features of a building, changes in usage of the building and land, topographical changes, subdivision, or further development without the prior review and approval of the easement holder. By limiting changes to an historic site, the owner alters the property’s market value, while benefiting the general public. This change in market value can be treated like any other charitable contribution deduction. The Internal Revenue Service has recognized the “before and after” valuation test as the approach to be utilized in placing a value on preservation easements. Under this method, the fair market value of the property after the granting of the preservation easement is subtracted from the property’s fair market value prior to the easement donation. The difference is the value of the preservation easement for federal income, estate and gift tax purposes. The actual value of a preservation easement should be determined by a qualified appraiser. More detailed information on preservation easements, including a sample easement agreement, can be obtained through the Historic Preservation Office. The Historic Preservation Officer can assist in determining whether or not a property qualifies for certification as historic. Due to the complexities of easements and potential tax consequences, those interested are also strongly encouraged to consult a qualified attorney or financial advisor early in the process. To learn more about Historic Preservation Easements, visit the NPS website or the Department of Archaeology & Historic Preservation. For a facade easement agreement/application, click here.
(Local
Legislation) A permit allowing a non-conforming use may be granted to an historic property by the City or County Zoning Board. The property and use may be declared eligible by the local historic review body (Landmarks Commission). For more information, contact the Historic Preservation Office at (509) 625-6983, or Planning Services at (509) 625-6300.
(Local
Policy) Relief from building code requirements may be granted to historic properties by local code enforcement officers. The local historic review body (Landmarks Commission) may recommend historic property eligibility and code deviation. To complete a form for building code relief for historic properties, click here. For more information on building code relief, click here, or call (509) 625-6983. These are
incentives available to certain properties on a general basis, but may
require special consideration when the properties involved are historic:
For additional information on these incentives, please review the appropriate sections within this website, or contact the Historic Preservation Office. For additional types of funding for historic properties, click here.
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