Your home doesn’t have to be built by Frank Lloyd Wright to get the benefits of owning a historic home. Many home owners don’t even know that they live in a historic district or home. You’d be surprised just how many districts are designated National Register of Historic Places and Landmarks in Chicago.
As a real estate broker with education and background in historic preservation, I’ve found that most agents and clients don’t fully understand what it means to buy, sell, or invest in historic properties. Most, in fact, don’t even understand the different levels of historic designation.
So what are the benefits of owning a historic home?
Property Tax Freeze. This is one of the great incentives the state of Illinois offers. If you’re an owner occupant of a historic home, you can invest 25% of the assessed value in approved rehab work and get an 8 year freeze on the assessed value of your home, with a subsequent 4-year increase to market rate. The purpose of this is to help you recoup the cost of rehab against the inevitable increase in assessed value and tax rate. This has also been successfully used by developers who are able to convert a historic building into condos and pass on the tax freeze to the new owners.
Historic Tax Easement. In 1980, Congress passed legislation to allow a federal income tax deduction to owners of historic properties who donate preservation easements to qualified organizations like Landmarks Illinois here in Chicago. This is a particularly good option for owners of Chicago landmarks to get a tax deduction while preserving the façade of their building.
They Don’t Make ‘Em Like the Used To. Most historic homes that have stood the test of time are standing for a reason – they are of a greater quality than the average structure today. Quality construction using old-growth wood, plaster, and other materials often outlasts contemporary building materials like plywood and drywall.
Return on Investment. What property owner doesn’t like to turn a profit? According to the Chicago Metropolitan Agency for Planning, several studies have shown the positive correlation between national register historic district designation and property value increases.
Historic Districts Are All Over the City. Historic Districts are all over Chicago – Logan Square, Gold Coast, Lincoln Park, Lakeview, East Ravenswood, and Hyde Park to name a few. Pilsen actually boasts the largest historic district in the state with over 4,400 contributing structures.
Bragging Rights. Owning a historic home or building means you’re in an elite group of people. A historic building could be designated for a variety of reasons, from a famous owner to a home that’s important to the broad patters of Chicago history. When you buy a historic property, you’re buying a unique piece of property that has been designated important.
History Happened Here. Perhaps best of all – you can put a building plaque on your building and let everyone know that you love your historic home.
In Chicago, there are two levels of historic designation: the National Register of Historic Places Landmark and the Chicago Landmark.
With the National Register designation, home owners are NOT required to follow any guidelines, UNLESS they would like to participate in the tax assessment freeze program. If they don’t wish to receive the tax freeze, then they don’t have to adhere to the guidelines. Owning a home on the National Register of Historic Places does not mean the owner has to restore their home.
If a building is a Chicago Landmark, then any changes to the exterior of the building is subject to review by the Chicago Landmark Commission. The owners are free to do what they wish to the interior, UNLESS the interior itself is protected.
For more information on selling or buying a historic property, or taking advantage of one of these incentives, give me a call at 312.698.8596 or email me at Kristine.Menas@dreamtown.com.