A tax deferral, not a tax break
RSA 79-E doesn't eliminate property taxes. It freezes the assessed value of a property at its pre-renovation level for a set number of years, then allows the full increase to phase in. The incentive makes renovation projects financially viable that otherwise wouldn't pencil out.
The core bargain: A property owner rehabilitates an underused or deteriorating building. In exchange, the city holds the assessed value steady during the relief period — taxing the pre-renovation value, not the improved value. After the period ends, full taxes resume on the improved property. In return, the owner agrees to a covenant ensuring a defined public benefit.
Which program could apply?
Click any card to see details. Bonus years under Traditional 79-E stack, up to the 15-year maximum. Relief begins upon completion of the rehabilitation, not at approval.
Community Revitalization
Rehabilitation of underutilized structures in downtown and village center zones. The foundational program, in use since 2006.
stackable bonuses
Residential Property Revitalization
Homeowners improving aging housing stock — including ADU creation. Works citywide, not just downtown.
same as traditional
Office Conversion Zones
Office (and potentially other commercial/industrial) buildings converted to residential use in a city-designated zone.
same framework
Housing Opportunity Zones
New construction or improvement in designated areas, with a mandatory affordability component. Only Conway, NH has adopted one.
from Certificate of Occupancy
Coastal Resilience Incentive Zone
For coastal municipalities — Portsmouth-specific. Tax relief tied to flood resilience improvements: elevation, drainage, and natural feature restoration.
same framework
Program comparison at a glance
| Feature | Traditional 79-E | RPR Zone | Office Conv. Zone | Housing Opp. Zone | CRIZ |
|---|---|---|---|---|---|
| Location restriction | Downtown / village center only | Anywhere in city | Designated zone | Designated zone | Coastal area (city-designated) |
| Property type | Any underutilized structure | Residential 1–4 units | Office, business, nonprofit, co-working → residential conversion | Any residential | Any structure in resilience zone |
| Building age minimum | None specified | 40+ years old | None specified | None specified | None specified |
| New construction | Replacement only (w/ historical review) | No | No | Yes | No |
| ADUs qualify | Possibly | Yes — explicitly | No | Possibly | No |
| Affordability req. | Not defined in law | Not required | Not required | ≥⅓ units ≤80% AMI (current law) | N/A — resilience focus |
| Rehab cost minimum | ≥15% assessed value or ≥$75,000 | ≥15% assessed value or ≥$75,000 | Not specified separately | Not specified | Municipality defines |
| Max relief period | Up to 15 years (stacked) | Up to 15 years | Up to 15 years | Up to 10 years (from CO) | Up to 15 years |
| Relief begins | On completion of rehab | On completion of rehab | On completion of conversion | At Certificate of Occupancy | On completion of measures |
| Covenant duration | Coextensive with relief period — governing body may require up to 2× the relief period (RSA 79-E:8) | ||||
| Frequency limit | Not specified | Once per 20 years per property | Once per 20 years per property | Not specified | Not specified |
| Grant exclusion | Does not apply if >50% of construction costs funded by non-repayable state/federal grants (RSA 79-E:14) | ||||
| NH adoption rate | ~68 municipalities (2024 survey) | 3 (Keene, Newport, Derry) | Very limited | 1 (Conway, 2024) | Not widely adopted |
| Scheduled repeal | None | None | January 1, 2035 | None | None |
What 79-E doesn't do
- It does not control rents after the relief period ends — post-renovation rents are market-rate unless a separate covenant specifies otherwise.
- It does not make projects financially viable on its own — high land costs and construction costs in Portsmouth mean the tax deferral is one input among many.
- It does not guarantee affordability in the long run. The statute does not define "affordable" — municipalities must specify this in their adopting ordinance or it is effectively undefined.
- It does not apply if more than 50% of construction costs come from non-repayable state or federal grants (RSA 79-E:14).
- Relief begins at completion, not at groundbreaking. Projects do not receive tax relief during the construction period itself.
- It requires staff capacity to administer: applications, financial need ("but for") assessment, covenant drafting and recording, and ongoing compliance monitoring for the full covenant term.
- Adaptive reuse is often more expensive than new construction — the incentive reduces but does not eliminate the cost premium.
- The covenant can be required to run up to twice the relief period — a 15-year relief period could mean a 30-year covenant. Developers should model this into long-range assumptions.
Could RSA 79-E help your property?
If you own an older home in Portsmouth and are considering renovating, converting space to an ADU, or adding units, the Residential Property Revitalization (RPR) program is the most relevant option — but it requires the city to designate RPR zones first.
Eligibility Explorer
Answer a few questions to see which programs could apply to your situation. Results are illustrative — consult a professional for specific advice.
A Portsmouth scenario
Suppose you own a 1920s duplex assessed at $650,000. You spend $180,000 to add a legal ADU and renovate both units. Without 79-E, your assessed value might jump to $900,000 immediately upon completion. With an RPR zone and a 7-year relief period, the clock starts when construction finishes — and for those 7 years you continue paying taxes on $650,000. Then full taxes resume on the improved value.
Things to keep in mind
- Portsmouth has not yet adopted any 79-E program. These are potential scenarios, not current policy.
- Tax savings estimates are illustrative. Your actual tax rate, assessed value, and relief years may differ significantly.
- The RPR Zone requires the city to designate specific areas — your neighborhood may or may not be included.
- The relief applies to the increase in assessed value only. You continue paying taxes on the pre-renovation assessed value throughout the relief period.
What it's looked like elsewhere in NH
Single-family to 5 units
Owner converted a historic dwelling to 5 units and added 3 more via a 1,319 sq ft addition. 7 years of relief.
86 Main Street
Rehabilitation of a historic building downtown, returned to productive residential and commercial use.
How the math changes with 79-E
For commercial and multi-unit developers, 79-E defers the property tax increase on improved value — improving the early-year cash flow on projects where adaptive reuse makes margins tight. The programs differ in what types of projects qualify and how years stack.
Program Finder
Describe your project to see which programs could apply.
Build your relief period
Under Traditional 79-E, relief periods stack. Select all that apply to your project:
Select bonuses above to see total years.
NH projects that have used 79-E
Strafford County Courthouse
59 apartments in a historic courthouse. 12 units at ≤80% FMR for 21 years. City forewent $315K in taxes; developer forewent $2.5M in rental revenue over 21 years.
Factory on Willow
90,000 sq ft mill converted to 60 studio apartments, event space, distillery, artist residency program.
Scenic Theater / Sallinger Block
Two historic city-owned buildings restored and connected. 50 units plus commercial space. Downtown revitalization anchor.
Developer considerations
- The "but for" test: municipalities are expected to assess whether the tax relief is genuinely necessary for the project to proceed. Applicants should be prepared to demonstrate financial need with pro forma documentation.
- The affordability bonus (+4 years) does not require new affordable units — rehabilitation of existing below-market units may qualify. The statute uses "a project that includes affordable housing." Municipalities define what "affordable" means in their adopting ordinance.
- The covenant can be required to run up to twice the relief period (RSA 79-E:8). A maximum 15-year relief period could mean a 30-year covenant obligation. Model this into long-range assumptions and legal review.
- Projects receiving more than 50% of construction costs from non-repayable state or federal grants do not qualify for 79-E relief (RSA 79-E:14). Verify grant sources before applying.
- Relief begins at completion of rehabilitation — not at approval or during construction. Projects do not receive tax deferral during the construction period itself.
- Adaptive reuse in Portsmouth's constrained market typically costs more than new construction. Verify that the tax deferral materially improves your pro forma before relying on it as a deal-maker.