The property must qualify
Generally the building must be listed on the National Register or contribute to a listed district (or be eligible). Confirm status before you plan a credit-driven budget.
Home › Restoration & tax credits
Restoring & the incentives
Restoration & tax credits
Bringing back a hundred-year-old house is a project — but Arkansas and the federal government both offer credits that can help pay for it if you do it by the book.
Two credits, two very different reaches
Two rehabilitation tax-credit programs commonly come up on historic Hot Springs properties, and the difference between them matters enormously for a homeowner. The federal Historic Rehabilitation Tax Credit is widely described as a 20% credit on qualified rehabilitation expenses — but it applies only to income-producing certified historic structures (think a rental, an inn, or a commercial building), not owner-occupied private homes, and the work must meet the Secretary of the Interior's Standards as certified through the National Park Service. If you're rehabbing a house to live in, the federal credit generally won't apply; if you're reviving a downtown building or a lodging property, it can be central to the deal. Confirm current federal rules with the National Park Service and IRS before you rely on them.
The Arkansas Historic Rehabilitation Income Tax Credit, administered by the Arkansas Historic Preservation Program (part of the Division of Arkansas Heritage), is the one that can reach owner-occupied historic homes as well as income-producing buildings, subject to program rules and caps. Public summaries describe Arkansas's credit percentage as tiered by the population of the city where the property sits and note per-project expense caps and an annual statewide funding cap — figures that change with legislation. Because the exact percentage, caps, and eligibility can shift, verify the current terms directly with the Arkansas Historic Preservation Program before you budget around them; we intentionally do not quote a fixed percentage here.
Eligibility basics
Before you count on a credit
Rehab credits reward doing the work correctly — and applying in the right order.
Owner-occupied vs. income
The federal 20% credit is for income-producing buildings only. Arkansas's state credit is the route that can reach an owner-occupied historic home — verify current rules.
Standards & pre-approval
Work typically must meet the Secretary of the Interior's Standards and be reviewed/approved before you start. Apply first; don't rehab and ask later.
Caps & funding limits
Programs carry per-project expense caps and, for the state credit, an annual statewide funding pool. Confirm the current numbers with the state program.
How a smart restoration sequences
Owners who succeed with a period restoration tend to work in this order: (1) confirm the home's National Register / district status and which credits it could qualify for; (2) talk to the Arkansas Historic Preservation Program — and, for income-producing buildings, the National Park Service — before touching anything, because pre-approval is usually required; (3) scope the real work, prioritizing the envelope (roof, structure, windows) and the systems flagged in inspection — aged wiring, foundation, plumbing, and any lead or asbestos; (4) build a budget with a healthy contingency for the surprises old houses always hold; and (5) document everything, since credits and insurance both reward a paper trail. The credits can meaningfully offset qualifying costs, but they reward patience and process, not improvisation.
If you're still choosing a house to take on, our Victorian homes and historic districts guides cover the stock and the rules; this page is about paying for the work once you've bought.
Planning a historic restoration?
Tell us about the house and what you'd like to do — we'll help you find preservation-savvy contractors and point you to the right program contacts.
Get connectedRelated Hot Springs niches