Virginia Historic Rehabilitation Tax Credits for an Older Richmond Home: What a Buyer Should Check Before Closing

Published November 1, 2026 | Written by the Mission Realty Team.

Virginia offers a state income tax credit equal to 25 percent of eligible rehabilitation costs on a certified historic home you own and live in. The credit is not automatic. The house must qualify, the work must meet federal and state standards, and the paperwork has to go through the Virginia Department of Historic Resources (DHR). A buyer can check most of this before closing.

This guide uses only pages we loaded and read: the Virginia Department of Historic Resources (DHR) tax credit page, the DHR forms page, the DHR frequently asked questions document and Code of Virginia section 58.1-339.2. Rules change, so confirm every item with DHR before you rely on it. This is general information, not tax or legal advice. A tax professional should review your own return.

What the state credit is, according to DHR

DHR describes Virginia’s rehabilitation tax credit as a program for both owner-occupied and income-producing historic buildings. Its program page says the state has issued about $1.7 billion in credits since 1997, at a 25 percent rate. The 25 percent figure also appears in the FAQ document and in the Code of Virginia.

The credit applies to eligible rehabilitation expenses, not the purchase price. Buying the house does not earn a credit. Spending money on qualifying work after you own it can.

DHR’s FAQ also says credits cannot be sold directly. Unused credit can be carried forward for 10 years. If you plan to use the credit, you need Virginia income tax liability to apply it against.

What the house must be

The house has to be a certified historic structure. In plain terms, that means it is listed individually on the Virginia Landmarks Register or National Register of Historic Places, or it is a contributing building in a registered historic district. The Code of Virginia section 58.1-339.2 contains the legal definitions of certified historic structure, material rehabilitation and owner-occupied. Read the owner-occupied definition before you assume a rental or a second home qualifies.

A house in an older Richmond neighborhood is not necessarily on a register. Age alone does not qualify it. The DHR FAQ says the first step, called Part 1, confirms whether a building is a contributing structure in a district or otherwise eligible.

City-designated Old and Historic Districts are a separate system. They are run by the City’s Commission of Architectural Review (see the City of Richmond page) and require a certificate of appropriateness for many exterior changes. A house can sit in a local district without being in a state or national district, and DHR’s maps show that the boundaries differ. Check both, because each one affects what you can do.

What the work must meet

For an owner-occupied home, the DHR FAQ sets the spending test at 25 percent of the prior-year assessed value of the building. Other property types face a 50 percent test. The spending is measured over 24 months, or 60 months if the project is phased. DHR publishes a measuring test document that explains how to count costs.

The rehabilitation must also meet the Secretary of the Interior’s Standards, as reviewed by DHR. That affects choices like replacing original windows, removing plaster or changing a front porch. A contractor who has not worked with DHR may not know where these lines fall.

You also need a certified public accountant’s review of the costs. The DHR forms page says projects under $500,000 need an agreed-upon procedures report, and projects of $500,000 or more need an audit.

The three-part application

DHR’s forms page lays out three steps, called Part 1, Part 2 and Part 3. Part 1 documents the building and its historic status, with photographs of the property before work. Part 2 describes the proposed work, and DHR reviews it for the standards. Part 3 reports the completed work and costs.

The FAQ says DHR strongly encourages applying before work begins. DHR says it reviews most projects within 30 days. The Part 3 deadline is one year after completion. DHR may also inspect the property within three years.

One detail matters for buyers who may sell later. DHR’s FAQ says there is no continuing-ownership requirement, but it recommends not selling before the final certification is issued. Think about your timeline before you start.

How a buyer checks eligibility before closing

These steps cost little and can be done before you remove contingencies. Start with the house itself, then involve DHR and the seller.

1. Look up the address. Search the DHR historic registers database and DHR’s map pages for the house and its district. Write down whether it is individually listed, contributing or neither. Check City district maps too, since local districts differ.

2. Ask the seller what was done. Ask whether the seller or a previous owner filed a Part 1, 2 or 3 application, and request copies. An application that was started but never finished is worth knowing about before you buy, so ask DHR how it would affect you.

3. Ask for the assessed value. The owner-occupied test is based on the prior-year assessed value. Get the figure from the city or county assessor record so you can compare it with your planned budget. Do not estimate it from the listing price.

4. Get contractor scopes in writing. A bid should separate work that may be eligible from work that is not, so you can sort it at the CPA step.

5. Ask DHR and a tax professional. DHR can confirm your status and answer process questions. A tax professional can tell you whether you have enough Virginia liability to use the credit.

If you are weighing an older house, our guide to buying a historic home in Richmond covers condition and cost issues, and our post on renovation loans explains how renovation funds are structured. Neighborhoods with many older houses include Church Hill, the Fan and Jackson Ward. Whether a specific block is in a district is something to confirm by address, not by neighborhood name.

Mistakes worth avoiding

Three errors come up in how this program is described. First, assuming an old house qualifies by age. DHR’s Part 1 review looks at register status, not the year built. Second, starting demolition or replacing original features before DHR has seen the plan, which is why DHR strongly encourages applying early. Third, counting every dollar of the project. Only eligible expenses count toward the credit, and your CPA sorts that out.

A fourth point is timing. DHR says most reviews take about 30 days, which is not instant. If you have a contractor waiting, build that review time into the schedule so the work does not start ahead of the approval.

Questions to settle before you write an offer

The credit is tied to completed work that DHR certifies in Part 3, and the purchase price earns none, so it does not reduce your cash need at closing. Plan the renovation budget as if you will pay the full cost up front. Ask your lender how a renovation loan would fit with a rehabilitation project, and run payments on our mortgage calculator.

If you are not sure the house qualifies, make the DHR lookup and the seller questions part of your due diligence period. Browse older homes in our property search, and our preferred lenders page lists lenders who can talk through renovation financing.

Frequently asked questions