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to their properties. Mills Act participants may realize substantial property tax savings of between 40% and 60% each year for newly improved or purchased older properties because valuations of Mills Act properties are determined by the Income Approach to Value rather than by the standard Market Approach to Value. The income approach, divided by a capitalization rate, determines the assessed value of the property.
In general, the income of an owner-occupied property is based on comparable rents for similar properties in the area, while the income amount on a commercial property is based on actual rent received. Because rental values vary from area to area, actual property savings vary from county to county. However, in short, the Mills Act can be a powerful incentive that offers potentially significant tax relief to owners of historic properties.
Q: What is a Qualified Historic Property?
A: A qualified historic property is a property listed on any federal, state, county, or city register, including the National Register of Historic Places, California Register of Historical Resources, California Historical Landmarks, State Points of Historical Interest, and locally designated landmarks. Owner-occupied family residences and income-producing commercial properties may qualify for the Mills Act program, subject to local regulations.
Q: What is Office of Historic Preservation’s role in the Mills Act program?
A: The Office of Historic Preservation provides Mills Act information to local governments and uses information provided by local governments to maintain a list of communities participating in the Mills Act program as well as copies of
Mills Act ordinances, resolutions, and contracts that have been adopted. The Office of Historic Preservation; however, does not participate in the contract negotiations, is not a signatory to the Mills Act contract, and has no authority over the administration of the Mills Act program.
Q: May I use hollow dual pane to replace the single layer glass of my home’s windows?
A: This is the age-old question about windows of historic properties. Use of materials will be looked at on a case-by-case basis but the important idea to remember is that an owner’s obligation is to maintain the historical appearance of the house, so the use of historic materials is tantamount to that.
Q: What about a property that is considered a Historical Cultural Monument? What is the difference between that and the Mills Act?
A: The designation of a property as a Historic-Cultural Monument basically paves the way for a Mills Act contract. Though it is extremely rare, you can have one without the other; however, it would not make sense for any property owner to have a Historic-Cultural Monument designation and a property and not seek the tax benefits offered under the Mills Act. The Historic-Cultural Monument status recognizes a building, structure, site, or plant life as important to the history of the city, state, or nation, and that status provides eligibility for the Mills Act program, providing a Historical Property Contract that can result in a property tax reduction. This status also allows for the use of the California Historical Building Code and owners of Historic-Cultural Monument status properties may purchase and display a plaque showing that the property has Historic- Cultural Monument status.
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