You know the old saying about nothing being certain but death and taxes? Well, I'm not about to argue against the grim reaper, but I know for a fact that taxes aren't always so certain. Wasn't so long ago that, for several years running, my tax bill from the Feds worked out to the nice, round number of zero. And it wasn't entirely the result of an English degree and underemployment.
The savings came courtesy of the tax credits available for the renovation and restoration of historic property. The credit, equal to 20 percent of total renovation costs, has been a major catalyst in scores of preservation projects around town—from rebuilding multi-million-dollar properties like the Emporium and Sterchi to rehabbing a run-down house into a few rental units much like the modest projects I invested in.
Invest is a key word here. Contrary to the urban legend that government grants got all those yuppie homeowners homesteading in Fourth and Gill, the preservation tax credits were strictly for income-generating property—commercial or rental. Which mean that while the credits were certainly handy for cleaning up the occasional condemned property, they did little to promote home ownership in historic neighborhoods. (The National Trust's efforts to expand the historic tax credits to include owner-occupied property never panned out.)
One housing crisis later, however, and the Feds are handing out tax credits to first-time homebuyers hand over fist, historic or otherwise. In fact, the credit has proved so popular that Congress extended the deadline. Homes under contract by April 30 and closed by June 30 can qualify for up to $8,000 in credits.
Just about any old home—or new home—can qualify, but going historic can make it easier to maximize your return. The credit's calculated at 10 percent of the purchase price. But there's an also $8,000 cap on the amount of the credit, meaning that a purchase price of $80,000 is pretty much the sweet spot when it comes to getting the most out of the incentive, the full 10 percent off the top.
And where are the most of the $80,000 homes in the Knoxville market? They're in the center city, particularly transitional neighborhoods like Oakwood, Lincoln Park, and Belle Morris to the north or South Haven across the river. There are also quite a few over on the east side, like this sweet brick bungalow just a few blocks from the zoo in Chilhowie.
French doors, hardwood floors, and a sunroom with casement window, this place has way more potential than many homes twice its price. And there's also a double lot with lots of gardening space, not to mention $8,000 in seed money. m
2803 E. Fifth Ave.
1,338 sq. ft.
2 bdrm/2 bath
Contact: Jennifer Montgomery
Coldwell Banker: 693-1111