I just printed out a letter to the NC Department of Revenue, asking them to send me $4,200, and you know what? They're going to do it. In fact, they've done it every year for the past 3 years, and they'll do it next year, too.
We did a major renovation of our house in 2002, and since our house is in a historic district, it was eligible for the NC State historic preservation tax credit. The credit allows us to get 30% of our total renovation costs back from our state taxes over a 5-year period. In all, we'll get $21,000 back from the state.
But here's the really weird thing. You would think that an incentive like this would have people in Greensboro's historic districts rushing to apply for the credit, wouldn't you? Especially since property values in the districts have been rising so fast.
But it's not happening. The State Preservation Office requires that your application be fully approved before you begin work, or you can't get the tax credit, and the approval takes about 90 days. Most people don't want to go to the trouble of filling out the application, or don't want to wait that long. I know 3 people who turned down the opportunity for these credits in the past few months.
I probably spent about 10 hours total filling out and documenting my application, and we made our contractor wait until we got approval. $21,000 for 10 hours of work? That's the best consulting fee I'll ever get. I just don't get why more people don't do this.
Thursday, April 14, 2005
People Don't Want Free Money
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3 comments:
David-
The reason they likely don't go through the "trouble" is probably along the same lines as why they:
1.) didn't return a non-performing Infomercial item.
2.) don't return ill fitting or defective merchandise to the local "big box" store.
3.) don't fill out the $20 rebate form on a $200 perchase.
4.) don't care
5.) were in a very big hurry to move into that home
Personally, I'd take the free money but, the cost of entry plus renovation in your neighborhood is out of my reach currently.
Heh. I send in rebates, too.
Rob, you could always buy now, renovate later, as we did (if you can stand living through a rehab!).
When we've run through this tax credit, we'll probably start on the next phase.
I am totally in support of the rehabilitation tax credits and am grateful for all the projects thaey have made possible. However, here's some other reasons that people might not take the tax credit:
You can't count labor you do yourself without paying yourself (and paying income taxes on your labor), so a lot of sweat equity cuts down your opportunity to hit the threshold. Without paying for a contractor, it is sometimes hard to hit that 25K in two year period. Or know ahead of time that you will hit it. We've put in a new kitchen, 2 baths, and HVAC, and would still of come under the 25K mark except for having to fire/hire a new plumber.
If we decided to go ahead with it, and push to hit the mark, 30% of 25K would have been $7500 divided over 5 years, or $1500, now this is still nothing to laugh at, but now you cannot deduct (I know, not as good as a credit) that amount from your federal income taxes.
For the do-it-yourselfer, its not such a good deal.
If you live in a local historic district, have an covenants on your home, and have a homeowner's association to follow up on things, sometimes not having a 4th oversight committee seems nice.
Elizabeth
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