Restoring a historic building does not have to mean raising the roof on budget costs – thanks to a rehabilitation tax credit available to buildings on the Virginia or National Register of Historic Places.

Designed to soothe sticker shock, the tax credits can foot up to 45 percent of the restoration bill. Though the tax credit has been available since the 1970s, the current slump in the nation’s housing market is causing homeowners to look for ways to invest in and improve their homes, making them more attractive for potential buyers when the housing market rebounds. The tax credits are one way owners of historic properties can do that.

Jane Covington, a new resident of Upperville, owns two historic homes in Albemarle County. She used rehabilitation tax credits to finance their restoration. She now lives in a farm owned by her husband.

“The property comes with a small historic chapel called the Johnston Chapel,” Covington said. The Covingtons will use the state rehabilitation tax credit to restore the chapel, she said.

Covington works as a general contractor with Jane Covington Restoration, offering restoration and consulting services.

“In Loudoun I’ve been a consultant to clients to use the rehabilitation tax credit to restore their homes,” Covington said.

Covington, who has studied architecture and historic preservation, is an expert on historic buildings.

“It’s something that I just grew up with, and then in college it became an academic pursuit,” she said. She studied historic preservation at Columbia University and then worked abroad in the field.

The rehabilitation tax credit is a reduction in income tax liability for homeowners or investors who substantially renovate their certified historic buildings, Covington said.

“Morven Park used the tax credit to finance their restoration,” she said. The Unison Store near Middleburg also received state and federal rehabilitation tax credits.

Private homes are eligible for the state credit, which rings in at 25 percent of qualified construction costs. Commercial structures can qualify for the state and federal credits. The federal credit is an additional 20 percent of qualified construction costs.

“Combined, an owner can realize 45 percent of qualified construction costs as a tax credit,” Covington said.

A commercial structure is defined as an income-producing building, such as a store, office building, retail shop or apartment building.

Qualified construction costs include all of the renovation’s expenses, including “soft” costs like architectural and engineering fees. Landscaping, building an addition, or adding an expansion to a historic building or property are not eligible expenses.

For more information on the federal rehabilitation tax credit, visit http://www.dhr.virginia.gov/tax_credits/tax_credit.htm. For more information on Jane Covington Restoration, visit janecovingtonrestoration.com or call 434-960-4678.