The Sioux Falls Historic Home Tax Moratorium Explained
How the moratorium works
South Dakota established the historic property tax moratorium to encourage preservation and rehabilitation of historic buildings. The core mechanic:
- Homeowner submits application with historic status documentation and planned improvements
- SD State Historic Preservation Office (SHPO) reviews and approves the application
- Homeowner completes the approved improvements
- SHPO verifies completed work matches approved plans
- County assessor reassesses property value including improvements
- For 8 assessment years, the increased value attributable to qualifying improvements is exempt from property tax
- After 8 years, property fully reassessed at improved value
The moratorium does not eliminate property tax entirely — the original pre-improvement assessed value remains taxable. Only the improved value (the value added by qualifying work) gets the exemption.
Which Sioux Falls homes qualify?
Three property categories qualify for the moratorium:
Individually listed National Register properties
Homes listed on the National Register of Historic Places on their own individual merit. Sioux Falls has multiple individually listed properties throughout the city.
Contributing properties in historic districts
Homes within the boundaries of listed historic districts that contribute to the district’s historic character. This includes:
- Contributing properties in Cathedral District
- Contributing properties in the McKennan Park Historic District
- Contributing properties in any other listed Sioux Falls districts
Not every property within district boundaries is a contributing property. Buildings constructed after the district’s period of significance, or those substantially altered from original character, may be non-contributing.
South Dakota state register properties
Homes listed on the South Dakota historic register meet state-level significance criteria and qualify for the moratorium separately from National Register status.
Verify individual property status through the SD State Historic Preservation Office before assuming eligibility.
What improvements qualify?
Qualifying work follows the Secretary of the Interior’s Standards for Rehabilitation. These standards emphasize:
- Restoration of character-defining exterior features (porches, windows, siding, trim)
- Preservation of significant interior features (built-ins, trim, plaster walls, original floors)
- Rehabilitation of original systems (fireplaces, original woodwork, decorative elements)
- Roof restoration with period-appropriate materials
- Foundation stabilization and structural preservation
- Systems upgrades (electrical, plumbing, HVAC) that do not damage historic features
- Interior renovations that respect historic character (kitchen and bath if done sensitively)
- Accessibility improvements that preserve historic character
What does not qualify
- Routine maintenance (painting, caulking, gutter cleaning)
- New construction additions unless specifically approved
- Renovations that remove or damage character-defining features
- Work that does not meet Secretary of the Interior’s Standards
- Improvements below the minimum investment threshold
Minimum investment threshold
South Dakota requires the improvements exceed a minimum dollar threshold to qualify. The threshold is set relative to the property’s pre-improvement assessed value. Contact SD SHPO for current threshold specifics as they update periodically.
Application process
- Contact SD State Historic Preservation Office early to discuss project
- Verify property historic status and district contributing designation
- Prepare Part 1 application documenting property and planned improvements
- Include photographs of existing conditions and detailed work descriptions
- Submit before beginning work — retroactive applications not accepted
- Await SHPO review and Part 1 approval
- Complete approved improvements per plans
- Submit Part 2 completion documentation with photographs of completed work
- Await SHPO verification that completed work matches approved application
- Receive moratorium certification
- Coordinate with county assessor for tax roll adjustment
Application processing typically takes 60 to 90 days for Part 1 approval. Post-completion verification runs another 30 to 60 days.
Federal Historic Rehabilitation Tax Credit
Federal law provides a 20% tax credit for rehabilitation of certified historic structures — but only for income-producing properties. Rental properties, bed and breakfasts, and commercial buildings qualify. Owner-occupied primary residences do not qualify for the federal credit.
The two programs work together for qualifying income-producing properties: 20% federal credit on qualifying expenditures plus the SD 8-year property tax moratorium. Application is coordinated through SD SHPO with National Park Service final approval.
Coordinating with historic review
Cathedral District homeowners already required to submit exterior work for local historic review can often use similar documentation for the tax moratorium application. Coordinate both processes:
- Sioux Falls Board of Historic Preservation approval for exterior work (Cathedral District only)
- SD SHPO tax moratorium application
- City building permits
- Contractor selection with historic renovation experience
Contractors experienced with Cathedral District and McKennan Park work often know the paperwork sequence and can help coordinate applications.
Related pillars
- For the full historic renovation framework see the Sioux Falls Historic Home Renovation pillar →
- For Cathedral District specifics see the Cathedral District Home Renovation Guide
- For McKennan Park specifics see the McKennan Park Historic Home Guide
- For contractor vetting see Homeowner Life →