If you love Church Hill’s character but worry about renovation costs, you are not alone. Between historic design rules and changing tax laws, it can be hard to know how to fund upgrades the smart way. The good news: you can often stack tax credits with renovation loans to stretch your dollars, especially on historic homes. This guide shows you how stacking works in Church Hill, what changed for 2025, and a simple plan to move forward. Let’s dive in.
What “stacking” means in Church Hill
Stacking means using more than one incentive or program on the same project. You might pair a state historic tax credit with a renovation mortgage, or finance a heat pump with a loan and still claim a federal energy credit.
Financing the work with a loan does not usually disqualify a tax credit. Eligibility is set by tax rules, not your lender. Ownership, placed‑in‑service timing, and which costs qualify are what matter.
Credits you can use
Federal home energy credits in 2025
Two homeowner credits have been popular in Church Hill:
- Energy Efficient Home Improvement Credit for items like heat pumps, windows, insulation, and audits. See qualifying items and annual limits on the IRS page for the Energy Efficient Home Improvement Credit. (IRS)
- Residential Clean Energy Credit for rooftop solar, battery storage, geothermal, and more. See eligibility on the IRS home energy tax credits overview. (IRS)
Important: a 2025 federal law accelerated the end date for these residential energy credits. Property must be placed in service by December 31, 2025 for most projects to qualify. Review the statute text for timing language. (Congress.gov)
Federal historic rehabilitation credit
The federal rehabilitation credit is generally 20% of qualified rehab costs on a certified historic structure, and it applies to income‑producing properties. The IRS guidance explains eligibility, basis adjustments, and recapture rules. It also states that you generally cannot claim both the rehabilitation credit and a federal energy credit on the same property. (IRS)
Virginia Historic Rehabilitation Tax Credit
Virginia offers a state income tax credit equal to 25% of eligible rehabilitation expenses. Unlike the federal program, Virginia allows owner‑occupied residential projects. The program is administered by the Virginia Department of Historic Resources, and it can stack with the federal rehabilitation credit in many cases. Thresholds, caps, and filing rules apply. (Virginia DHR)
The stacking rule that trips people up
The big federal rule: if you claim the federal historic rehabilitation credit on a property, you generally cannot also claim a federal energy credit for that same property. That choice often decides your path.
Common Church Hill strategies:
- Owner‑occupied home: Virginia state historic credit plus federal energy credits for qualifying work placed in service by 12/31/2025.
- Income‑producing property: federal historic credit plus Virginia state credit, and typically no federal energy credit on the same property.
- Energy‑only: if you are not pursuing a certified rehab, you may focus on the federal energy credits through 2025.
Coordinate early with a tax professional to confirm the best route for your situation.
Renovation loans that pair well
FHA 203(k)
An FHA 203(k) combines purchase or refinance with rehab funds in one loan. Limited 203(k) covers non‑structural work, while Standard 203(k) covers major repairs. It is for owner‑occupant primary residences and is widely used on older city homes. Energy upgrades can be financed under this program. (FHA 203(k))
Fannie Mae HomeStyle Renovation
HomeStyle is a conventional renovation mortgage for purchase or no‑cash‑out refi. It can include energy improvements and allows financing up to 75% of as‑completed value, within other agency limits. Occupancy options include primary, second home, or investment, subject to rules. (Fannie Mae HomeStyle Renovation)
Freddie Mac CHOICERenovation
CHOICERenovation finances a wide range of repairs, including resiliency and energy work, with single‑closing convenience and oversight. Streamlined options exist for smaller projects. (Freddie Mac CHOICERenovation)
Key point: paying with a loan does not usually affect whether a tax credit applies. But lender draw schedules, inspections, and completion timelines can affect when a project is considered placed in service.
Church Hill approvals and timing
Historic district review
Most of Church Hill falls within Richmond’s Old & Historic Districts. Exterior changes often require review by the Commission of Architectural Review. Plan design approvals and permits before you start. (City of Richmond Historic Preservation)
Why timing matters in 2025
Because federal residential energy credits are set to end for property placed in service after December 31, 2025, scheduling is crucial. Confirm contractor timelines, inspections, and, for solar, utility interconnection. Use your lender’s draw schedule to align completion with your target tax year. (Congress.gov)
Note: Church Hill is within the City of Richmond. Neighboring Henrico County has different local processes.
Real‑world scenarios
Buying a fixer in Church Hill to live in
- Use FHA 203(k) or HomeStyle to finance roof, systems, and comfort upgrades.
- Apply for Virginia’s 25% state historic credit if your home and scope qualify.
- Install eligible energy items like a heat pump or insulation by 12/31/2025 to seek federal energy credits.
- Keep invoices, product documentation, and proof of installation dates.
Converting a Church Hill rowhouse to a rental
- Consider the federal 20% rehabilitation credit plus the Virginia 25% state credit for certified work.
- Expect that the federal energy credit will generally not be available for the same property if you claim the federal rehab credit.
- Track basis adjustments and keep detailed cost allocations.
Already own and want solar or a heat pump
- If you occupy the home and are not using the federal rehab credit, you may pursue the Residential Clean Energy Credit or the Energy Efficient Home Improvement Credit if placed in service in 2025.
- Financing through a renovation loan is fine, as long as you own the equipment and meet IRS rules. (IRS home energy credits)
Your step‑by‑step plan
- Check historic status and eligibility with Virginia DHR and the City of Richmond preservation office.
- Talk with a lender about FHA 203(k), HomeStyle Renovation, or CHOICERenovation.
- Get itemized contractor bids and separate line items by category, like HVAC, windows, insulation, and structural repairs.
- Build a documentation file with permits, product labels, contractor certifications, and inspection or interconnection proofs.
- Meet with a tax advisor to choose your path and confirm filing forms, ordering rules, and basis adjustments.
- Map a schedule that fits lender draws, city approvals, and the placed‑in‑service deadline for 2025 energy credits.
Documents to collect
- NPS certification forms for federal historic projects and DHR application materials for the Virginia state credit.
- Itemized invoices showing materials and labor by task, plus manufacturer documentation for qualifying energy equipment.
- City permits, Commission of Architectural Review approvals, and final inspections.
- Proof of placed‑in‑service dates, including utility interconnection for solar.
- IRS filing support, such as Form 5695 for residential energy credits and records relevant to the rehabilitation credit.
Let’s make a plan for your Church Hill home
Navigating credits, loans, and historic approvals can feel like a maze. We help you line up the right financing, contractors, and timeline so your project stays eligible and on schedule. Ready to map your next step in Church Hill? Connect with Michela Worthington to get started.
FAQs
Can I stack Virginia’s historic credit with a 203(k) loan in Church Hill?
- Yes. The state credit is separate from financing, and owners often pair it with FHA 203(k) or conventional renovation loans, subject to program rules and documentation. (Virginia DHR program overview)
Does financing solar with HomeStyle still let me claim a federal energy credit in 2025?
- In most cases yes, if you own the system and it is placed in service in 2025 under IRS rules; funding source is not the disqualifier.
How do federal historic rehab and federal energy credits interact on a Church Hill rental?
- You generally cannot claim both on the same property; the federal rehab credit typically blocks the federal energy credit. (IRS rehabilitation credit guidance)
Do I need city approval for exterior work in Church Hill’s historic districts?
- Usually yes. Most exterior changes require review through Richmond’s historic preservation process before work begins. (City of Richmond Historic Preservation)
Are federal residential energy credits available after 2025?
- The current law ends most residential energy credits for property placed in service after December 31, 2025, so schedule 2025 projects carefully.
