Despite all the recent wintery weather, spring is officially here. With its arrival, homeowners turn their attention to maintenance projects – including exterior painting.

While seemingly harmless, painting a historical home carries a surprising significant risk of damage. The National Park Service’s Preservation Brief #10: Exterior Paint Problems on Historic Woodwork notes:

Because paint removal is a difficult and painstaking process, a number of costly, regrettable experiences have occurred – and continue to occur – for both the historic building and the building owner. Historic buildings have been set on fire with blow torches; wood irreversibly scarred by sandblasting or by harsh mechanical devices, such as rotary sanders and rotary wire strippers; and layers of historic paint inadvertently and unnecessarily removed. In addition, property owners using techniques that substitute speed for safety have been injured by toxic lead vapors or dust from the paint they were trying to remove, or the misuse of the paint removers themselves.

Consider several factors when choosing an appropriate paint for your historical home:

Quality

The temptation to save money by using cheap paint can be alluring. Many contractors, and even homeowners, mistakenly think that paint choices need only match historical colors, but this is not so. The old adage “you get what you pay for” is particularly true for your paint. Investing in quality paint will save you money in the long run.

Preparation

The key to successful paint application is in knowing what preparation is required for the different types of paint that may already be on your building – each has its own preparation requirements. If you are not sure what type of paint is on your building, you can consult a qualified contractor to obtain a paint analysis providing you with both the chemical and color makeup of your existing paint.

Handling Lead Paint

The health risks of lead exposure are well known – brain and nervous system damage, hearing and vision loss, impaired development of children…but, did you know that lead in dust (such as the dust created while sanding and prepping surfaces for new paint) is the most common route of exposure to lead? To avoid these risks, choose a contractor who is “Renovation, Repair, and Painting” certified by the EPA for lead paint handling.

Ask yourself these questions before beginning any painting project:

  • Does my paint exhibit any peeling, crackling, chalking (powdering), crazing (small, interconnected cracks), mold, mildew, staining, blistering or wrinkling?
  • Does my building have an existing paint application that is inappropriate for its historic fabric?
  • Do I know what type of paint is currently on my building and what preperation is required before painting over that type of paint?
  • If I am using a contractor, are they “Renovation, Repair and Painting” certified by the EPA for lead paint handling?
  • Does that contractor understand which methods, tools, materials, and chemcials are appropriate for paint removal on my historical building?

Here is a video discussing maintenance and paint options:

This week on the Practical Preservation podcast Jonathan and Danielle answer the older home maintenance questions posed by our listeners.

  • Water infiltration through masonry walls – how it is getting in to the building and damaging the mortar, options to stop storm water, and why is your plaster crumbing
  • Paint – preparation is key, lead paint precautions, traditional paint options: mineral silicate paints, lime washes, milk paint, and oil-based paints
  • Wood repair and preservation – solid wood Dutchman repairs and consolidant/epoxy systems

We enjoyed helping our listeners with their burning questions. Let us know if you have any questions you would like answered on a future Practical Preservation podcast.

Spring is finally here, and it’s time to look around your house to see if winter weather has taken its toll. We’ll soon be firing up our grills and relaxing with friends and family. But, before you can do that, there’s much work to be done.

In the 19th century, before vacuums came into common use, early spring was a time to open windows and sweep homes from “top to bottom” to herald the coming of warmer weather. Your spring maintenance projects can be handled the same way – from roof to foundation.

So, let’s take a walk around your property to make a detailed list of needed repairs. Here are ten useful tips to get your house ready for spring:

  1. Inspect your roof. Harsh winter weather can cause roof shingles to become lost or damaged. Shingles that are cracked, buckled, loose or missing granules must be replaced. A qualified roofer should check and repair flashing around plumbing vents, skylights and chimneys.
  2. Examine your chimney. Look for signs of exterior damage and replace any loose or missing bricks. Have the flue cleaned and inspected by a certified chimney sweep.
  3. Check for loose, leaky or clogged gutters. Clear leaves, sticks, muck and other debris by flushing the gutters with water. Contact a professional gutter cleaner if you are unable to do so yourself. Improper drainage can lead to water in the basement or crawl space. Make sure downspouts are also free of debris and that they drain away from the foundation.
  4. Look for loose or damaged siding. Once you have assessed the need for repairs, spring is also a good time to clean your siding with soap and water from a garden hose.
  5. Fill low areas in your yard with compacted soil. This is especially true near the house. Spring rains can cause flooding, which can lead to foundation damage. Pay attention to puddles of water in your yard. When water pools in these low areas, it creates a breeding ground for insects like mosquitoes.
  6. Check outside faucets. Freezing temperatures can do damage to plumbing; this is especially true for outdoor fixtures. Before hooking up the hose to water your flowerbeds, turn the water on and place your thumb or finger over the opening of the faucet. If you can stop the flow of water the pipe inside your home may be damaged. Contact a professional plumber if you aren’t comfortable with replacing the pipe yourself. While we’re on the subject of watering flowers, check the garden hose for dry rot.
  7. Clean and service your air conditioner system. Hire a qualified heating and cooling contractor to clean the coils and check for damage to the ourside unit. Scheduling an annual service call is recommended to keep the system functioning efficiently. Changing interior filters on a regular basis can also extend the life of your air conditioning system. Also, be sure to vacuum out your floor registers.
  8. Inspect the water heater. Water heaters work twice as hard during the winter to make your home a warm and comfortable environment. After all that hard work, water heaters can accumulate rust or develop leaks. To make sure your water heater is at its top performance for spring, check for signs of leaks or corrosion.
  9. Repair wood trim. Inspect windows, doors, railings and decks now before spring rains do more damage to exposed wood.
  10. Months of exposure to rain, snow and freezing temperatures can do just as much damage to your child’s playground equipment as it can your home. Ensure all outdoor toys are safe by tightening bolts, removing splinters and sharp edges and cleaning off any mold or animal droppings.

Greg Huber from Eastern Barn Consultants and Past Perspectives joined the Practical Preservation podcast to discuss:

  • How barn styles varied from region to region 
  • What makes barn construction unique
  • The type of barn Danielle had never heard of

We also discussed the services Greg offers documenting barns and researching house histories, the barn tours and seminars, and the books he has written.  

Contact info:

Greg Huber, Architectural Historian

610-967-5808

[email protected]

Books:

The Historic Barns of Southeastern Pennsylvania: Architecture and Preservation Built 1750-1900

Bio:

Gregory Huber – of Past Perspectives and Eastern Barn Consultants

• Gregory D. Huber is an independent scholar, consultant and principal owner of both Past Perspectives and Eastern Barn Consultants, historic and cultural resources companies that are based in Macungie, Lehigh County, Pennsylvania.
• His special focus is in House Histories and Barn Histories of historic homesteads in southeast Pennsylvania and beyond.
• A student of early vernacular architecture since 1971, Huber has specialized in pre-1850 barn and house architecture of Holland Dutch in New York State and northern New Jersey and Pennsylvania Swiss-German and certain English settled areas of the northeast.
• Huber’s latest book – out in August 2017 – The Historic Barns of Southeastern Pennsylvania – Architecture and Preservation – Built 1750 to 1900 has reached Number One Book on the Amazon Best Seller list in its specific category – Vernacular Architecture
• He is author of more than 270 articles on barn and house architecture and is co-author of two other books and editor of another book – Barns – A Close-up Look.
• He has lectured to more than 225 audiences and led dozens of barn and house tours in several states of the northeast.
• He is available for historic homestead consultation work on old houses and barns.

 

 

It is easy to think that if the look of a historical building is maintained and the appropriate types of materials are used, then the building has been successfully preserved. But preservation is not just about preserving how something looks, it is primarily focused in preserving how something is so that it remains as original as possible for future generations.

As important as it is to preserve how our historical buildings actually are, inevitably replacements will need to be made when features are so deteriorated that stabilzation, conservation, or restoration are simply not viable options.

One example is the Thaddeus Kosciuszko National Memorial (the smallest National Park at the corner of 3rd and Pine Street in Philadelphia). We worked with the National Park Service to restore the exterior of the building including to repair and restore wood windows, doors, and a cedar shake roof.

To accurately preserve the Kosciuszko house, we needed to match not just the size, shape, and textures of the shingles themselves, but also the craftsmanship details added during the manufacturing and installation that characterized the roof. To do this, we ordered hand-split cedar shakes and had our detail-oriented artisan craftsmen recreate the original installation.

Video of shakes being hand-split for our order.

Without this attention to detail, the Kosciuszko house would not have been preserved as an accurate testimonial to our architectural heritage. It would have been easier and less expensive to replace the shake roof with any number of other options, including some that are commonly considered “historically accurate,” but they would have not been historically accurate on this house. Even if they were considered “period appropriate,” when we choose a different treatment than what was there originally, we are altering, not preserving, the very things that make the building historic.

In order to avoid significant and sometimes irreparable damage to your building, consider replacing only the deteriorated or missing pats of your building’s features. Use materials that match old in design, color, and texture (both physically and visually). Also, document the original material, the replacement process, and materials used, for future reference and research.

Things to ask yourself about the materials on your building:

  • Do I have documentation of all former replacements, including documentation of original features?
  • Have I had my building evaluated by a qualified contractor to identify any inappropriate replacement materials or approaches?
  • Do I document all replacements I do, including written and photographic documentation, noting the materials, details and tooling on both the original and the replacement?
  • Are there any parts of my building’s original features that are deteriorated or missing and need replacement?
  • Is it possible to replace the deteriorated parts instead of replacing the whole feature?
  • Have I checked with a qualified contractor to see if remediation is needed for any not-in-kind replacements previously performed on my building? 

Judith Broeker from Adventures in Preservation joined the Practical Preservation podcast for this episode. AiP is a non-profit organization that promotes heritage tourism by combining travel, new skills, and community intuitive. They organize travel to various locations (in the United States and Europe scheduled for 2019) to work with skilled craftspeople on a preservation site in need of repairs.

Contact information:

Judith Broeker – [email protected]

Bio:

Adventures in Preservation was founded in 2001 by two women with a great love of historic buildings and a strong desire to travel and understand the world. While perusing the travel section of the Boulder Bookstore, the Volunteer Vacation section suddenly brought everything into focus. Judith Broeker combined her goal of saving historic buildings with the concept of experiential travel, and created Adventures in Preservation’s hands-on preservation vacations.

Work started on several sites in the U.S., and as word spread, requests for help began to pour in from around the world, underscoring the great potential of using volunteers to restore historic buildings. While supporting community-based preservation initiatives, AiP staff and volunteers discovered that their love of old buildings could translate into environmental and economic sustainability for communities.

In 2019, we are working with communities in Virginia, Montana, Scotland, and Armenia.

Founder, Judith Broeker is a materials conservation specialist with both research and hands-on experience gained at historic structures in the United States and abroad. Judith holds a degree in Asian Studies, along with a Master’s degree in History with an emphasis in historic preservation. She is the Program Director of AiP and responds to all requests for preservation assistance. She also works with community members to fully develop each project. For her, nothing is better than exploring a historic building with camera in hand.

Susan Dippre from Susan Dippre Designs joined the Practical Preservation podcast to discuss how working at Colonial Williamsburg combined her love of history and landscaping. She has recently begun her own company to provide the general public with Williamsburg inspired designs from natural materials.

Contact information:

[email protected]

Williamsburg Farmers Market

Bio:

Susan Dippre began her career in Colonial Williamsburg’s gardens in April of 1980. Her first assignment as a Gardener was at Carter’s Grove Plantation, at it’s beautiful location on the James River. She assisted with the holiday decorations there and fell in love with the beauty and creativity.

In 1990 she was promoted to Foreman, responsible for the maintenance of the gardens and grounds at the Williamsburg Inn and Lodge, and later, Merchant Square. During this time she renovated the rooftop garden at the DeWitt Wallace Museum.

She became a Supervisor in the Historic Area in 1995; inheriting the responisiblity of decorating the whole area for the holidays. She, with the assistance of a dozen Gardeners and a half dozen Carpenters, were decorating well over 100 buildings in the Historic Area, Merchant Square, and a majority of the Hotel Holiday decorations, including all interior and exterior trees and the front of the Williamsburg Inn, streets, and parking lots for over 20 years.

The favorite parts of her job were the demonstrations and workshops also working with all the designers to create the beautiful and original designs that graces the many buildings throughout. Recently she has begun a business so she can continue the design processes throughout the year.

Resources:

Colonial Williamsburg Decorates for Christmas

Christmas Decorating for Williamsburg

John Goodenberger and Lucien Swerdloff from the Clatsop Community College’s Historic Preservation and Restoration program joined the Practical Preservation Podcast to discuss:

  • The collaborative approach their program uses to deal with the contractor storage
  • Sustainable building (viewing historic buildings as resources to be preserved)
  • Their combination of teaching both theory and hands-on preservation (very practical)

Contact info and Bios:

Clatsop College

1651 Lexington Ave

Astoria, OR 97103

The Clastop Community College Historic Preservation Program, in Astoria, Oregon at the mouth of the Columbia River, prepares students for work in the building trades with an emphasis on the preservation and restoration of historic and vintage residential and commerical buildings. Students gain the knowledge and skills to plan and restore structures in historically accurate ways utilizing both traditional and modern materials and methods. The program offers classes in historic preservation theory and workshops in practical hands-on skills.

John Goodenberger is a preservationist and instructor in the Historic Preservation program. Educated in architecture at University of Oregon, John has guided the restoration of commerical and residential buildings in Astoria. Working also a the City’s historic building consultant, he has analyzed the integrity and historic significance of more than 1,000 properties. John was the chair of the State Advisory Committee on Historic Preservation and is currently a regional representative for Restore Oregon, and is on the board of Columbia Pacific Preservation, a collaborative group promoting education and economic development through historic preservation.

Lucien Swerdloff is the program coordinator and instructor in the Historic Preservation and the Computer Aided Design programs at Clatsop Community College. He earned Master of Architecture and Master of Science degrees from the State University of New York in Buffalo. He has organized numerous preservation workshops throughout Oregon and Washington and worked on the restoration of many historic structures. Lucien is on the boards of Columbia Pacific Preservation, the Lower Columbia Preservation Society, and the Astoria Ferry Group, working to preserve, protect, and operate the historic Tourist No. 2 ferry.

Resources Discussed:

National Council for Preservation Education

Historic Preservation and Energy Efficiency Guide – Pacific Power

Jay Reyher from Quanta Panel joined the Practical Preservation podcast to discuss:

  • How they began producing storm windows
  • The technology behind their system
  • Why saving your original windows makes sense from an engineering standpoint

Quanta Panel’s tagline is, “You don’t need brand-new windows.  Your windows need brand-new technology.”  We couldn’t agree more…and it helps that they manufacture less than a mile from our office – made in America and local!

Contact information:

Quanta Technologies, Inc.
1036 New Holland Avenue
Lancaster, PA 17601-5606
1.855.782.6821

John Walters from LeWalt Consulting Groupe joined me to discuss how tax strategies can help with land and property preservation efforts.

We covered:

John’s contact information and additional resources:

LeWalt Consulting Groupe, LLC
https://www.facebook.com/LeWaltConsulting

727-388-9024

Tax Codes Referenced:
Conservation Easements
Historic Preservation Tax Incentives
Energy Incentives

Bio:
John is an Enrolled Agent, Certified Tax Coach, Best Selling Author, Instructor and Speaker at the firm LeWalt Consulting Groupe, LLC located in St. Petersburg, Florida.
He is known on LinkedIn as:
“Florida’s Leading Pro-Active Tax and Financial Change Agent for your Diverse needs and Individual Lifestyle”
At LeWalt Consulting Groupe, LLC our PASSION is creating “Tax Alpha” that helps you, as the Entrepreneur and Business Owner, live the “Ultimate”​ TAX-FREE lifestyle you desire using the complexities written into the Internal Revenue Service Tax-Code to your favor!
After all… We believe those numbers on your TAX FORMS is your “REAL” money, why not protect, preserve, and keep it for you and your family?
How may we Help You Live a Life that is less taxing…?

Tran

Announcer: Thank you for tuning into the Practical Preservation podcast. Please take a moment to visit our website practicalpreservationservices.com for additional information and tips to help you restore your historical home. If you’ve not yet done so, please subscribe to us on iTunes, Stitcher, and Sound Cloud, and also like us on Facebook.

Announcer: Welcome to the Practical Preservation podcast hosted by Danielle Keperling. Keperling Preservation Services is a family-owned business based in Lancaster, Pennsylvania dedicated to the preservation of our built architectural history for today’s use as well as future generations. Our weekly podcast provides you with expert advice specific to the unique needs of renovating a historic home, educating by sharing our from-the-trenches preservation knowledge and our guests’ expertise, balancing modern needs while maintaining the historical significance, character, and beauty of your period home.

Danielle: Thank you for joining us on the Practical Preservation podcast. Today, we have John Walters speaking with us about some tax tools that you can use to help preserve buildings. John is an Enrolled Agent, Certified Tax Coach, best-selling author, instructor, and speaker at the firm LeWalt Consulting Groupe, LLC. located in St. Petersburg, Florida. He is known on LinkedIn as Florida’s leading proactive state and financial change agent for your diverse needs and individual lifestyle.

Danielle: “At LeWalt Consulting Groupe, LLC., our passion is creating tax alpha that helps you as the entrepreneur and business owner live the ultimate tax-free lifestyle you desire using the complexities written into the Internal Revenue Service tax code to your favor. After all, we believe those numbers on your tax form is your real money. Why not protect, preserve and keep it for you and your family? How may we help you live a life that is less taxing?”

Danielle: So John, thank you for joining us and sharing your knowledge about the tax code and how that can be used to help us preserve buildings.

John: Well, thank you Danielle. I enjoy talking to people about taxes even though, I’m sure for most, it seems like a boring subject, but it’s one of the most things you’re going to pay all of your life and you might as be able to control it to your best ability.

Danielle: And understand it the best you can. I know I don’t feel I understand everything as much as I probably should. But yeah, I think the protections that people don’t understand that are written into tax code are really interesting because they can help you finance a project, they can help you make sure the building is preserved. Those things, I don’t think people necessarily think that those are tax code things, but they are. So thank you for sharing that knowledge with us.

John: Sure, no problem.

Danielle: I know one of the things that most people don’t either understand or are aware of is the tax conservation easement. If you could talk to us a little bit about that and help us understand. I understand a little bit from a preservation standpoint that the easement means that the outside can’t be changed because it’s protected, but I don’t understand what the tax ramifications of that is.

John: Okay. In the Internal Revenue Code, there’s a section called 170(h) and it talks about land conservation strategies, especially for federal and state taxes. What a land conservation strategy is designed to do is it’s designed to meet basically the tax payer’s – in this case, your client or whoever you’re working for – financial goals and take into heart their charitable desires.

John: In essence, it’s to preserve their properties and realize their most favorable economic outcomes, and actually, you get some tax savings out of it too. You become part of what we call the ready to conserve your assets for individuals and enjoy the related tax savings possible and the income opportunity in the property’s amenities.

John: In essence, what you want to do is let’s say you have a piece of property, but you don’t want it to be built on or you want to preserve it for generations to come and things like that. There are provisions in the tax code under the land conservation easement strategies is to actually give that land away. In essence, you’re giving it away for the purposes of being able to develop it or use it for some other commercial purpose to the government and you have official documents that tell you that you can do that. In turn, there are charitable deductions that you can take for that conservation.

John: With that, your land is preserved. Basically, you still retain rights to it, but you just can’t use it for other purposes, intended purposes.

Danielle: So it almost restricts you? Yeah, it restricts what you do with it. Okay.

John: Exactly. You have basically a deed of restriction, but that land can be used for whatever thing that you set it up for.

John: For instance, let’s say that you have land and you want to preserve it for hunting and you don’t want anybody to build anything on it. You could have a land conservation easement for that property; it could still be used for hunting and you can use for that purpose. You can even build a structure on there like a lodge or something like that and people could use it for hunting, but they wouldn’t be able to use for some other commercial development.

Danielle: [crosstalk 00:06:17] Yeah.

John: Yeah. In turn, when you take that conservation easement, the government’s giving you a tax deduction and it can be up to 50% of your adjusted gross income. Let’s say for every dollar this property is valued at, you go get it appraised and stuff, sometimes you can get to four to five times the benefit. In essence, what you’re telling is, well, if I built it commercially, this is what it would be valued at. But if I-

Danielle: So if you develop the property, that’s why they use as your [crosstalk 00:07:00]

John: Right.

Danielle: Okay, that makes sense.

John: So if I was going to put a housing development on it, it would be worth X. But if I say, “I don’t want to allow that on there,” they’re going to take that value of the housing development, it’s appraised out, subtract what the land is worth right now, and you get the difference in the tax credits.

Danielle: Okay. Okay, and then is that an actual credit onto … I’m trying to think about what I’m familiar with preservation easements. You usually then donate that to a nonprofit, is that correct? Or is the conservation a little bit different?

John: Yeah, it’s actually donated to the government, per se, because it’s under tax code. Now, there’s the charitable contributions fall under the federal tax code, but you can also get state tax credits too, depending on what state you’re in and the property.

Danielle: Yeah, I know. Yeah, the preservation tax credits are very dependent on which state you’re in, how robust they are.

John: Mm-hmm (affirmative), exactly.

Danielle: Yeah. So this benefits the person that’s doing the easement by reducing their taxable income. Is that pretty much what the goal is?

John: Right. You can reduce your actual tax that you would owe by between 30 and 50% of your adjusted gross income.

Danielle: Okay.

John: Now, let’s say it exceeds 50% of your gross income in that particular year, those charitable credits can be carried over for many years into the future until you can use them up.

Danielle: Okay.

John: Yeah, so typically, if you don’t have a whole lot of income in that particular year, it will just carry over until you can use those up.

Danielle: Use it up, so there’s not a time limit. I was thinking there’s a difference – and now this is telling you what I don’t understand about taxes. There’s a difference between a credit and a deduction, is that correct? So the credit is like just straight money to you, it’s not based on any kind of scale, correct? Is that what-

John: Well, yeah. There are credits that are basically a one-to-one dollar reduction in your taxes. Now, in the credit world-

Danielle: Okay, so [crosstalk 00:09:27] a percentage. Yeah.

John: Exactly. In the credit world though, you have two types of credits. You have what we call non-refundable, meaning that it can reduce your income, your taxes to zero. Then after that, if you still have more credit, you can’t use it anymore. You won’t get additional money back. But if they’re refundable, that means that you could have zero income tax that you owe, and still get a refund back from the government. Now-

Danielle: Oh, okay. Makes sense. Yeah.

John: And with the deductions, they are a percentage, depending on what your marginal tax bracket is. So in essence, a deduction, if you’re in the 25% tax bracket, then you’re going to get 25% or 25 cents back on the dollar for every dollar you deduct.

Danielle: Okay, okay. I know I see, in this area, a lot of conservation easements for farmland.

John: Exactly.

Danielle: Where the families want to preserve their farms from development but they still want to be able to use them and farm them. The easement doesn’t stop you from being able to use it from how you’ve been using it; it’s how you write the easement. Is that correct?

John: Right. So for an example like that, in farming and ranching, Ted Turner, which we all know from the broadcasting world and everything else, he has huge tracks of land in Wyoming and Montana that he has easements on. He still allows – there’s wild buffalo that run on there. He has cattle that graze and everything so it can still be used for ranching, but no one can actually develop it into a housing development or any commercial purpose.

Danielle: Okay, okay. Very, very interesting. Thank you. So then when you go to do the charitable deduction, then they figure out what the amount would be if they developed and then they give you … Is it the difference? Is that pretty much what your credit is?

John: Yeah. So for instance, let’s say it would be valued, appraised, at a million dollars if it was fully developed, but right now in your hands, ownership, it was worth really only $100,000, per se, in undeveloped land and everything else. So in fact, you could probably get a deduction for the $900,000 difference there.

Danielle: Because you’re not using it to develop it completely. It is a benefit then to the community too. That does make sense to me as to why it would be a tax credit also because you’re agreeing to leave it the way it was. It’s not [crosstalk 00:12:20].

John: Right, yeah.

Danielle: Yeah. So what are the risks to somebody who wants to use an easement or a land conservation easement to preserve their property? What would the risks be to that?

John: Well, a couple risks, not necessarily to the owner of the land. There are people that actually don’t own the land but want to invest in the ownership of that property with the original owner to get these tax credits.

Danielle: Oh, right.

John: So some of the risk there would be basically you may not get the asset protection as a limited partner instead of the ownership of it. Operating reserves set aside at a closing. There may be monies that are needed in excess of that property for the conveyance of it and the deed. Could be additional capital calls if other risks – or not risks but unknowns are known about the property. Maybe there was so encumbrances on the property that you didn’t know about and stuff, so money would have to become available to take those encumbrances away so that deed could be unrestricted.

John: Sometimes there’s a taxation risk basically due to audits because sometimes these things are not put together correctly. Lately, there’s been a little bit of talks in the IRS about making this what they call a listed transactions, where they still allow it, but you would have to list it there of what the transaction was and basically have your, per se, ducks in a row if you wanted to-

Danielle: [crosstalk 00:14:19] yeah.

John: Yeah. Of course, as always, anything in the code is subject to abuse.

Danielle: Right.

John: You may be working with unscrupulous people, a.k.a. crooks, that want to take your money basically and don’t do it properly so the whole deal falls apart.

Danielle: Yeah. That and I know that when we talk to home owners about it, people are nervous about restricting their deeds. I don’t know if you have that knowledge if it … Does it lower the value of the property or is it usually somebody who would be interested in conservation, is that something that would be appealing to them?

John: Oh, it would be very appealing to someone because most of us do have a charitable gift to us or want to do something, either that, preserve it for nature or actually for our legacy and stuff like that. But even if you end up selling the property or whatever, that easement and everything else can convey to the next group of people in ownership.

Danielle: Yeah, it attaches to the deed. Yep. Then they then have to … As far as I know, that is the only preservation tool that actually restricts what you can do because even being on the National Register, that building can still be torn down if you take the appropriate steps and get approval. You know what I mean?

John: Right.

Danielle: So that doesn’t protect it as much as the easement does. I know of a project here in Lancaster that they were going to develop. It was where Thaddeus Stevens had his offices in Lancaster. They were going to tear it down and then the nonprofit that held the easement came forward and said, “No, you can’t. We have an easement on this property.” And they actually ended up, it’s really a cool building to look at now because they incorporated the modern construction around this building. It’s marrying that old with the new, but they had to keep the original building there because they did hold the easement.

Danielle: That’s the only preservation tool that I know guarantees that the building will not change and have to stay the way it has been. So very, very [crosstalk 00:16:51].

John: Yeah, exactly because you are actually accepting a deed of restriction that permanently prohibits some sort of commercial exploitation and rights to the real estate property and stuff. You’re absolutely right. That’s pretty much the most ironclad vehicle there to be able to preserve something.

Danielle: Right, okay. And then I know you had given me some notes. I have that you would talk about the energy efficient property credits.

John: Sure, sure.

Danielle: Those are being extended, which is kind of exciting for people who are wanting to maybe put some green energy to use in their homes.

John: Yeah. The wind and solar credits have actually been extended to 2024 because our government sees the value of doing that and making us less reliant, basically, on fuels like oil and gas and things like that. The interesting thing is for these types of credits, you can qualify up to 30% of the eligible cost, which in fact, I just did one for a client this tax season.

John: They invested in a solar roof. They spent $52,000 on the roof. They ended up getting a $17,000 tax credit back, so it kind of wiped out all of their tax that they owed. Yeah and they’ll actually get to carry some over into the subsequent years because they used up all the taxes that they had this particular year.

John: So yeah, the beauty about theirs is … They were so excited because they started getting checks from the power company. In fact-

Danielle: Oh, that is exciting.

John: Yeah! They got a $400 check back from Duke Energy, which is the provider in the area. They were so elated because now the power company owes them money.

Danielle: Yeah. I know that when we started talking, you and I had started talking about doing this podcast topic, we had just been talking about the Tesla roof material. Those are individual solar cells. They picked all things that would be traditional materials and you can’t tell the difference. I’ll be curious to see how those are embraced, once they do their full roll-out, by the preservation community because those solar panels, the types of [crosstalk 00:19:42] they chose-

John: Oh, the new shingles?

Danielle: Yeah, but they chose slate and tile, those are not inexpensive roofing materials anyway. So if somebody’s going to do that, I’ll be curious to see how it’s embraced by the preservation community because there’s definitely that intersection of green and then traditional-looking materials at least.

John: Right.

Danielle: I think that’s pretty exciting.

John: Yeah. A lot of those things are coming out from the world of the Tesla vehicles and all of that to Elon Musk and producing new types of materials.

John: Yeah, that was the thing is people, they liked the idea of the solar, but they didn’t want to have these what they would consider ugly panels on their roof. So now-

Danielle: [crosstalk 00:20:29], yeah, yeah.

John: Yeah. It’s probably going to be in your world, open up a lot more opportunity and people to want to do that because yeah, now they can more look like the original property that we’re trying to preserve and everything, and get the efficiency out of it of modern energy systems.

Danielle: Yeah, definitely. I think that’s something exciting to definitely keep an eye on.

Danielle: The other thing and something that I think that people know about but it’s kind of like they don’t know a lot about it is the rehabilitation credits. I know the federal government has theirs, and then the State of Pennsylvania has some. There’s not a lot of money in the state. The tax credits here are very new for rehabilitation. I think they’re only a couple of years-old. I know that the federal tax credits have been around for a while and they’ve actually shown good economic development benefits, but if you could talk a little bit about the Rehabilitation Credits in the tax code.

John: Yeah, there’s rehabilitation credits.

Danielle: That’s a tough word.

John: Yeah, I know. That’s under Internal Revenue Code Section 47. There are actually two of them. One, it’s a 10% of the qualified rehabilitation expenditures, or whatever you spend, with respect to the qualified rehabilitated building. Other than a certified – it doesn’t have to be a certified historic structure in this case, okay?

Danielle: Right.

John: You can still get 10% of that. Now, in the second case, you can get 20% of the qualified rehabilitation expenditure, or cost, if it is a certified historic structure. So there, you can benefit even more.

John: Basically, the federal government is telling us, “Look, we understand you want to keep these buildings. They’re great buildings or whatever like that. They just need some tender love and care. We’re going to help you lower the cost to go ahead and rehab these buildings, especially if you’re going to keep them in order, use them for an economic purpose.”

John: So what we’re kind of looking at too is, okay, what’s in it for the government? Well, obviously if you’re going to be able to use that building, rehab it, for its use or just bring it back up to code so you can keep using it, well, they’re going to get more tax money, right?

Danielle: Right, right.

John: Because you’re going to remain in business and use that building. Well, the states, obviously, are still going to benefit because they’re going to get additional property taxes and they’ll probably reassess it on the rehabbed cost of it because, oh, it’s gone up in value because you rehabilitated it. There’s two benefits there.

John: Now, obviously the states benefits aren’t as rich as the federal government because, as we know, our government’s got plenty of money to throw around. Right?

Danielle: Right. Maryland has a really good rehabilitation credit system though. Theirs is, I think if you combined the federal and Maryland’s, you can get up to 50%.

John: Yeah.

Danielle: Yeah, so some of the states have a really good system.

John: I think it’s great. And so basically, it’s something to take into benefit there if you have a building that would meet those criteria. There again, you might get a little bit if it’s not a historic building, but still, it might be in your benefit to do it.

John: Now, like everything that we do in the tax code, there’s good and bad things. Well, the good thing is, yes, you could get some assistance there for doing it. The bad thing is you might have to jump over some hurdles, some paperwork, this and that, and everything else. But I found that once you do it, it’s well worth it.

Danielle: Yeah, I agree. It is a process to get through that because at first, you have to be approved by the State Historic Preservation Office, and then you go. They actually, once they have everything that they need, then they forward it onto the National Park Service for review. But typically, it is a lot of paperwork, but most people can get through it. It’s just having to stay on top of it.

Danielle: I do know one thing that is, and the tax benefits, one thing that’s kind of frustrating to homeowners that this is mostly or it is just for income-producing properties. So you’ve either gotta be a business or a bed and breakfast or rental unit, something like that.

John: Right.

Danielle: One other thing that I learned that’s very interesting is the tax credits on your passive income. Well, most people don’t have a lot of passive income. So I sat through a presentation. I’m like, “Oh, that makes so much sense.” Banks are willing to pay, buy the tax credits from you, because they have passive income and they can use them. The credits are transferrable. I didn’t know that.

John: Yeah, yeah.

Danielle: When I heard that, I was like, “Oh my goodness. I never would have thought to shop my tax credits to anybody,” but there are people who do it.

John: That’s an interesting point that you bring up. You know, a lot of people say, “Well, if I can’t use them, I lose them.” No, they actually have benefit and people are willing to use them. The other thing too is you’ve heard of those called carbon tax credits for pollution and everything else?

Danielle: Yeah, yeah.

John: Well, let’s say you have a business and you get X amount of tax credits, but your business is pretty efficient, non-polluting, and everything else. You get these credits but you don’t use them all the way or whatever like that. Well, there’s certain other businesses that are more polluting and they need more credits than they actually get from whatever they’re producing, so they’ll buy those credits from you and that helps them out too. There is a market for that.

Danielle: Yes, I would have never even thought that until I was sitting in that presentation. I’m like, “That makes so much sense.” Because most people, even if they’re high-income people, don’t have a lot of passive income, but banks do. I thought that was a really, really interesting thing that I learned.

John: Yeah. And the thing most people don’t understand is you have to match up the types of income and losses to be able to take them. For what you’re just saying there, if you have passive income, you have to have passive losses to match up against them. You can’t take income that you earned from your job and actually offset passive income or investment income in there. That’s a key.

John: What we try to do there is if we do have a client that does have lots of passive losses, we try to find some passive incomes. We call it a PIG PAL strategy. Passive activity losses matched up with passive income generations.

Danielle: Oh, okay. Very cool. Yeah, you understand how to maximize these strategies. I thank you for sharing your knowledge with me and our listeners. Could you tell me, unless, did you have anything else you wanted to share or anything that we didn’t care that you wanted to?

John: Well, I think that’s pretty good.

Danielle: Oh, okay. Very good.

John: There’s so much embedded in there.

Danielle: There is.

John: Yeah.

Danielle: And I’ll definitely, the tax codes or sections that you referenced, on the website resource section, I will definitely put those there so people can go and read them.

John: Okay.

Danielle: And your information will definitely be on the website too, but how can our audience get a hold of you if they have specific questions or they want to use your expertise to help preserve their buildings?

John: Well, they can actually call my office if they want. My phone number directly is 727-388-9024. If, by chance, somebody doesn’t answer the phone, leave a message and we get back to you in a short amount of time.

John: You can also go to my website it’s www.lewaltconsultinggroup.com and leave a message there or we have lots of information on the website that you can contact us or find out some other information about the different tax codes. I think you’ll probably put our website on your-

Danielle: I will, yeah, I’ll definitely make sure that gets put on the website too. We’ll have links, and I’ll have the additional information, and anything else that we think that would be good resources for all of our listeners.

Danielle: Thank you so much for joining us today.

John: Okay, well, yeah. It was a pleasure talking here and one last thing.

Danielle: Oh, sure.

John: With the broadness of the tax code, people think, “Oh, it’s just in general,” or whatever. There’s really something for everybody in there, we just have to sometimes dig deep for you. If you employ certain people, there’s tax credits for employing certain groups of people.

Danielle: Right, yeah. We had just learned that we could get a Made in America tax credit because we manufacture. I never even thought about what we do as manufacturing, but it is! There’s always something in there that you might not even think would apply to you.

John: Yeah, so every situation, individual situation, is different. Don’t think that there’s nothing in there for you. There may be, depending on what you want to do. Hey, it’s worth a phone call or a short email conversation. We can see what we can do for you.

Danielle: Okay, very good. Thank you so much again.

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