Iowa cuts historic tax credit access for homeowners

Iowa cuts historic tax credit access for homeowners

Iowa has largely excluded single-family homes from a historic preservation tax credit program that helped homeowners shoulder the cost of restoring some of the state's oldest houses. Why it matters: Preservationists warn that the change removes a financial incentive to save historic homes, which can be far more expensive to restore than to tear down.

Driving the news: A provision of a bill signed by Gov. Kim Reynolds last year made most single-family homes ineligible for Iowa's Historic Preservation Tax Credit.

  • The Iowa Economic Development Authority (IEDA) put implementing rules into effect about two months ago.

    • Zoom in: For homeowners, the program offered credits worth up to 25% of qualified rehabilitation costs, potentially saving tens of thousands of dollars on a restoration.

  • Project applications submitted before July 1, 2025, were grandfathered, but new single-family applications have been barred since that date.

    • By the numbers: Demand already exceeds the program's $45 million annual cap.

  • IEDA received $80 million in requests in FY2024 and $64.7 million in FY2025.

    • State of play: The credit has long been used in DSM's historic Sherman Hill and River Bend neighborhoods.

  • River Bend resident Jon Royal, who lived in a home built by his great-grandparents, told lawmakers in 2018 that the neighborhood's restorations would not have been possible without the credits.

    • The big picture: Among Iowa's neighboring states, Missouri and Wisconsin offer historic rehabilitation income-tax credits to homeowners, while South Dakota offers an eight-year tax assessment moratorium for historic homes.

  • Minnesota, Nebraska and Illinois exclude owner-occupied homes from their state income-tax credit programs.

    • What they're saying: Steve Wilke-Shapiro, co-president of Preservation Iowa, tells Axios he doesn't expect the change to reverse the revival of areas such as Sherman Hill, but it will "reduce potential" for future restoration.

  • He predicts fewer rehabilitations and, over time, more historic houses lost to demolition.

    • The other side: IEDA director Debi Durham argued in 2020 for ending credits for owner-occupied homes, saying only a few owner-occupied projects had recently received about $1 million in total.

  • She said taxpayers shouldn't be paying people who can afford their own remodeling work.

    • What we're watching: Whether Preservation Iowa and other advocates can persuade lawmakers to restore the credit for single-family homes.

  • Wilke-Shapiro says it's among Preservation Iowa's legislative priorities.