Addition to the National Register of Historic Places provides direct and indirect benefits to the property owner. The incentives for being on the National Register are divided into owner-occupied and commercial categories.
Owner-Occupied incentives: The National Register listing affords property owners fast-track consideration for tax breaks. Classification as a non-commercial historic residential property on the state level will reduce by one-half the taxable portion of the property versus an owner-occupied primary residence. This classification, however, requires compliance with a list of criteria that reflects the requirements for the National Register. Once classified as “non-commercial historic property,” the tax rate decreases from 10% to a 5% tax rate. This special rate will be in effect for 15 years and then the property owner must reapply for the tax reduction. This classification is available to anyone in a historic home, listing on the local or National Register streamlines the process. The property owner must complete and submit the State of Arizona Historic Property Tax Reclassification Application for Residential, Owner-Occupied Properties.
Commercial incentives: The National Register of Historic Places and state level incentives provide assistance to commercial property owners. The federal government provides tax incentives to commercial, historic properties. By being listed on the National Register, a property owner of a depreciable (income producing) building can apply for a 20% tax credit. If a property is not on the National Register, but was in use before 1936, then a 10% tax credit might apply. These two credits cannot be combined, but are not the only options for federal aid in historic preservation. Other tax benefits for granting an easement exist. This benefit is calculated by taking the fair market value of the property before the easement and comparing it to the fair market value of the property after the easement. If there is a positive impact on the value of the property the taxation rate does not increase. This benefit can be combined with the 20% tax credit, if other conditions are met. In addition to tax incentives, the Federal Historic Preservation Fund (HPF) exists as a source of funds to encourage non-federal spending and investment in historic preservation. The State Historic Preservation Office administers the disbursement of this fund, and a minimum of 10% of the fund is earmarked for certified local governments. It requires a 2/3 match from a non-federal source. Historical Application for Income Producing Properties