How is the fair market value determined for a rehabilitated historic property?

Fair market value for a rehabilitated historic property is primarily determined through specific provisions that take into account various factors related to the property's status and enhancements made during its rehabilitation, particularly within the first eight years. These provisions often involve unique considerations such as the property’s historical significance and the improvements made to returning it to a viable state, which can influence its marketability and value.

The focus on the initial years allows appraisers to capture the impact of restoration work more accurately, reflecting market trends that may shift as revitalization occurs in the area surrounding the historic property. This method creates a more precise valuation that accounts for incentives and financing available specifically for historic properties, unlike standard appraisal practices for non-historic properties or new constructions, which do not factor in the layers of historical context and improvements related directly to the property's heritage.

Understanding the regulatory framework and financial considerations tied to historic properties enhances the valuation process, ensuring that rehabilitated properties are appraised in a manner that reflects their unique characteristics and economic potential.