Two different things people confuse constantly
The tax credits are money. They depend on National Register status and on federal and state certification of your rehabilitation work. Nobody makes you apply.
The Certificate of Appropriateness is a permit. It depends on whether your parcel is inside Tarboro's local historic district, and it is not optional. The Town's Unified Development Ordinance provides that a COA is issued by the Historic District Commission before the building permit, and that no exterior alteration, construction, moving or demolition in the district may occur without one.1
Those are different maps and different processes. You can be in one and not the other. Confirm both before you buy.
The North Carolina rehabilitation tax credit
North Carolina's credit lives in Chapter 105, Article 3L of the General Statutes. Everything in this section is read from the statute text, not from a summary.2
Owner-occupied (non-income-producing) — G.S. 105-129.106
| Credit rate | 15% of rehabilitation expenses |
|---|---|
| Minimum spend | At least $10,000, incurred within any 24-month period per discrete property parcel |
| Cap | $22,500 per discrete property parcel |
| Frequency | No more than once in any five-year period |
| Federal credit? | No. The federal credit is income-producing only. |
| Not eligible expenses | Acquisition cost, enlargement of an existing building, site work, personal property |
So the practical ceiling on an owner-occupied Tarboro restoration is $22,500 of state credit, reached at $150,000 of qualifying rehabilitation expense. Above that, the credit does not grow. That is worth knowing before you scope a project.
Income-producing — G.S. 105-129.105
This is where Edgecombe County's own distress ranking becomes worth money. The state credit for income-producing property is tiered and additive:
| Component | Rate |
|---|---|
| Base, qualifying expenses $0–$10M | 15% |
| Base, qualifying expenses $10M–$20M | 10% |
| Development tier bonus (Tier 1 or Tier 2 county), on expenses up to $20M | +5% |
| Eligible targeted investment site bonus, on expenses up to $20M | +5% |
| Educational-purpose bonus, on expenses up to $20M | +5% |
| Cap | $4,500,000 per income-producing certified historic structure |
Edgecombe County is Tier 1 for 2026 — and ranked most distressed in the state
NC Commerce's 2026 development tier designations, released November 26, 2025, place Edgecombe County at economic distress rank #1 of 100, Tier 1.3 For an income-producing project here with $10 million or less in qualifying expenses, the state credit is therefore 15% base plus the 5% development tier bonus = 20%. Stacked with the federal 20 percent, that is a real 40 percent of qualifying rehabilitation expense on a commercial building.
Tier designations are recalculated every year. Confirm the current year's designation before you rely on the bonus.
The eligible targeted investment site bonus is genuinely relevant in a county like this one. G.S. 105-129.105(c)(4) requires all three of: the site was formerly a manufacturing facility (or ancillary to one, or a warehouse for selling agricultural products, or a public or private utility); it is a certified historic structure; and it has been at least 65 percent vacant for at least two years immediately preceding the eligibility certification. It requires an eligibility certification from the State Historic Preservation Office. If you are looking at a vacant mill or warehouse, ask about it by name.
Carryforward
Unused credit carries forward nine succeeding years (G.S. 105-129.108(c)). The credit may be taken against franchise, income, or gross premiums tax — one only, elected on the return, and the election is binding, with carryforwards applied against the same tax.
The sunset, which almost nobody mentions
G.S. 105-129.110: the Article 3L credits expire for qualified rehabilitation expenditures and rehabilitation expenses incurred on or after January 1, 2030. For expenses incurred before that date, the credit expires for property not placed in service by January 1, 2032.
The last extension (S.L. 2021-180) moved the sunset from 2024 to 2030. I found no later extension. On a restoration that takes two or three years to plan and execute, that is not a distant date — it is a planning constraint. Confirm the current statute before you rely on a timeline, because the legislature has extended this credit before and may again.
The federal 20 percent credit
- 20 percent of qualified rehabilitation expenditures, income-producing certified historic structures only. An owner-occupied residence does not qualify.
- Since the 2017 tax act, the credit must be taken ratably over five years, not all in the year the property is placed in service.
- The old 10 percent credit for pre-1936 non-historic buildings is repealed.
- Substantial rehabilitation test: qualified expenditures must exceed the greater of the adjusted basis of the building and its structural components, or $5,000, measured over a 24-month period (60 months for a phased project).4
The certification process
| Step | What it does | Who reviews |
|---|---|---|
| Part 1 | Certifies the building's historic significance | State Historic Preservation Office reviews first, then NPS. No NPS fee. |
| Part 2 | Describes existing condition and proposed work; judged against the Secretary of the Interior's Standards for Rehabilitation | SHPO reviews and forwards to NPS with a recommendation. NPS charges a review fee. |
| Part 3 | Filed after completion; NPS approval makes it a "certified rehabilitation" | NPS. Fee applies. |
SHPO recommends; by law the National Park Service makes the certification decision. Submission and review are fully electronic and forms must be the current revision.5 North Carolina may also charge its own application fee, capped by statute at 1 percent of completed qualifying rehabilitation expenditures (G.S. 105-129.107(b)).
An owner-occupied, state-credit-only project uses a different track: Part A and Part B through the NC Historic Preservation Office, with no NPS involvement.
Eligibility depends on National Register status, and there is a trap
The state credit requires a State-certified historic structure: individually listed on the National Register, or certified by SHPO as contributing to a National Register district — or contributing to a locally designated district that has itself been certified by the U.S. Department of the Interior.
Only three local districts in North Carolina hold that Interior certification: Raleigh, Goldsboro and Madison.6 Tarboro's local district is not one of them. So the practical route to the credit here is National Register status — being inside Tarboro's local historic district does not by itself qualify a building.
Confirm contributing status inside the National Register district before you make an offer that depends on the credit.
The Certificate of Appropriateness, practically
Tarboro's Historic District Commission administers the COA under the Town's Unified Development Ordinance, with the Town's own Historic District Design Standards as the reference framework.1
What generally needs one: exterior alteration, new construction, moving a structure, and demolition, within the local district. "Alteration" is read broadly in ordinances of this kind — materials, colors, profiles, configurations and additions.
What generally does not: ordinary maintenance that does not change design, material or appearance. The UDO says this explicitly. Like-for-like repair with matching material is the most useful exemption in the whole ordinance.
Interiors: a local historic district commission's authority is exterior. Note that this is separate from the tax credits — a certified rehabilitation under the federal and state programs is reviewed on interior work against the Secretary of the Interior's Standards. So a project can be free of COA review inside and still constrained by the credit program.
Sequence matters. The COA comes before the building permit. Talk to the Town's planning staff before you commission drawings, not after. A pre-application conversation is the cheapest thing in this entire chapter.
What this site deliberately does not publish
No COA review timelines, no meeting cadence, no approval-likelihood table for specific alterations. Sibling sites in this fleet publish those for their own towns because those figures were confirmed with those towns. I have not confirmed them with Tarboro, and a wrong timeline in a buyer's project schedule is a real cost. Call the Town of Tarboro Planning and Building Department and ask; then hold them to what they tell you, not to what a website said.
What I would do, in order
- Confirm whether the building is a contributing structure in the National Register district. This decides the credits.
- Confirm whether the parcel is inside the local historic district. This decides the COA.
- Decide whether the project is owner-occupied (state 15 percent, $22,500 cap) or income-producing (federal 20 percent plus state 20 percent here, $4.5 million cap). They are completely different programs.
- Talk to a CPA who has actually filed one of these. The credit interacts with basis, passive activity rules and recapture in ways that are outside a broker's lane and outside a general accountant's routine.
- Do Part 1 before you start work. Work done before certification can be work that does not count.
- Watch the January 1, 2030 sunset against your real project timeline.
The credits are real money and they are not a discount coupon. They are a certification process with a sequence, a deadline, and a reviewer in Washington who has never met you.
Wondering whether a specific house qualifies?
Send me the address. I will tell you what I can confirm about contributing status and district boundaries, and who to call for the rest.
Data note: Statutory rates, caps and the sunset are read from N.C.G.S. Article 3L as of September 2026; tier designations are recalculated annually; federal rules are per the IRS as of the same date. This is not tax advice. Confirm everything with a CPA and with the NC State Historic Preservation Office before relying on it.
Sources
- Town of Tarboro Unified Development Ordinance, current version effective August 18, 2025 (PDF) and Historic District Design Standards (PDF). ↩
- N.C.G.S. Chapter 105, Article 3L. ncleg.gov (PDF) ↩
- NC Department of Commerce, 2026 County Development Tier Designations memo and ranking table. commerce.nc.gov; announcement November 26, 2025. ↩
- IRS, Rehabilitation Credit (Historic Preservation) FAQs. irs.gov ↩
- National Park Service, Historic Preservation Certification Application process. nps.gov ↩
- NC Historic Preservation Office, rehabilitation tax credits for non-income-producing historic properties. hpo.nc.gov ↩