Have you ever walked past a cool old building and thought, “That would make an amazing office”? Probably not—because most of us assume historic buildings are expensive, complicated, and just not worth the hassle.
But here’s something most people don’t realize: there are tax credits designed specifically to make restoring historic buildings more affordable. And if you’re a dentist looking for a unique space for your practice, a historic building tax credit could mean big savings.
That’s right—if you buy and renovate a historic building, you could get a big chunk of that money back in tax savings.
Here’s how it works:
How These Tax Credits Work
The biggest tax break here is the federal Historic Rehabilitation Tax Credit. It’s a 20% tax credit on the money you spend restoring a historic property, so if you put $200,000 into renovations, you could get $40,000 back. Unlike a deduction, which reduces taxable income, a credit directly reduces your tax bill, which makes this even more valuable.
Some states offer their own historic tax credits on top of that. Depending on where you are, you might be able to stack the federal and state credits for even bigger savings. States with strong historic tax credit programs include:
- Missouri – Offers up to 25% in state tax credits, meaning you could get back almost half of your renovation costs when combined with the federal credit.
- Texas – Has a 25% state credit for qualifying projects, and yes, even though Texas doesn’t have state income tax, these credits can be transferred or sold.
- Virginia – Provides a 25% state tax credit, making historic renovations a popular choice for business owners.
- North Carolina – Offers 15%-25% in credits, depending on the project.
- Ohio – Up to 25% in state tax credits, making historic renovations more financially accessible.
Many other states have similar programs, so if you’re curious about whether yours does, it’s worth checking.
What Counts as a “Historic” Building?
Not every old building qualifies. To get the credit, the property needs to be officially recognized as historic—either individually or as part of a designated historic district. The renovations also need to follow preservation guidelines, but that doesn’t mean you can’t modernize it for a dental office. You just have to be thoughtful about the updates.
Note: Even if a building isn’t officially designated as historic, it might still qualify if it’s in a historic district. Some states have additional flexibility, so just because a building isn’t listed yet doesn’t mean it’s not an option.
What Kinds of Renovations Qualify?
Here’s where it gets a little tricky. The goal of these credits is to preserve historic buildings, so your renovations need to follow certain guidelines. You can’t just gut the building and put up a brand-new modern office inside—you have to work with the existing structure while updating it for modern use.
That doesn’t mean you can’t make it functional for a dental practice. The National Park Service (which oversees the federal credit program) generally allows:
- Updating plumbing, electrical, and HVAC systems to meet modern standards.
- Restoring or replacing historic windows, doors, and woodwork to match the original style.
- Improving interior spaces as long as major historic features aren’t completely removed.
- Making ADA-compliant modifications, like adding ramps or accessible bathrooms.
What they don’t want is someone buying a 100-year-old building, gutting it completely, and turning it into something unrecognizable. The best projects work with the original architecture rather than against it.
Why a Historic Office Might Be Worth It
Okay, so tax savings are great, but is this actually a good idea for a dental practice?
In the right situation, yes. A historic office could give your practice a unique look that helps you stand out.
Patients often appreciate a space that feels warm and inviting, rather than a cookie-cutter medical office. Plus, many historic properties are in well-trafficked, desirable locations – great for visibility.
And let’s be honest, it just feels cool to own a piece of history.
A Few Things to Consider
This isn’t the fastest or easiest way to set up your practice, so there are some things to think about. Renovations take time, and you’ll likely need approval from preservation authorities before making major changes. Older buildings can also come with quirks like higher maintenance costs, so you’ll want to plan for that.
That said, if you find the right building and take advantage of these tax credits, you could end up with a one-of-a-kind practice in a prime location, while getting a nice chunk of your renovation costs covered.
Want to See If This Makes Sense for You?
If this has you curious- even just a little – let’s talk.
At Core Advisors, we help dentists navigate tax credits, real estate decisions, and all the financial details that come with running a practice. We can walk you through the numbers, help you figure out if a historic building is a smart move, and make sure you get every tax benefit available.
To get in touch, simply head over to our Getting Started page to book an introductory call. Our friendly team are always up for a chat.
Until next time!
