Historical & Architectural Preservation / Historic Tax Credit
Baltimore City Tax Credit for Historic Rehabilitations and Restorations
Baltimore City is offering a property tax incentive program that will save thousands of dollars for owners of landmark designated properties and properties located in the city's historic districts. Properties individually included in the Baltimore City Landmark list and the National Register of Historic Places, as well as properties located within local districts and national districts will benefit. To date, the tax credit has generated over $560,000,000 of investment in Baltimore’s Historic landmarks and districts.
The program, called the Property Tax Credit for Historic Restorations and Rehabilitations, is a 10 year, comprehensive tax credit program that helps the City in its mission to preserve Baltimore's historic neighborhoods by encouraging property owners in these districts to complete substantive rehabilitation projects. The credit is granted on the increased assessment directly resulting from qualifying improvements. The assessment subject to the tax credit is computed once and used for the entire life of the credit. The credit for projects with construction costs less than $3.5 million is 100%, and for projects with construction costs more than $3.5 million is 80% in the first five taxable years and declines by ten percentage points thereafter.
• This is Baltimore City's first tax credit designed to benefit owners of historically designated property.
• Ten-year tax credit for all renovations, interior and exterior, is the most generous in Baltimore City and among the most comprehensive in the country.
• Credit benefits both homeowners and businesses.
• Goal of the program is to help preserve Baltimore's neighborhoods by encouraging restoration and rehabilitation.
• Credit is fully transferrable to a new owner for the remaining life of the credit.
- How do I apply for the Historic Tax Credit?
How do I determine if a property is eligible for the historic tax credit?
- The Historic Tax Credit Application process is transitioning to a NEW ONLINE TAX CREDIT APPLICATION SYSTEM for all projects by October 1st, 2014. After Friday, September 19th, CHAP will no longer accept paper applications. A seminar on the new system will be held on Monday, September 15th from 1-3pm in the Baltimore City Department of Planning Phoebe Stanton Boardroom. If you would like to be contacted with specific information about the online application or the seminar, please send an email to HistoricTaxCredit@baltimorecity.gov.
- You can request an application at the Baltimore City Commission for Historical and Architectural Preservation (CHAP) in our office.
- Your property must be historically designated as a:
How do I determine if my project will qualify for the tax credit?
- Baltimore City Landmark,
- National Register individual designation,
- Contributing to either a Baltimore City or National Register Historic District.
What do I submit with my initial, completed application?
- You must invest a minimum of 25% of the full cash value of your property (Land and Improvements, as listed in SDAT).
- Your application must be reviewed and approved by CHAP before you begin any work on your building, if you wish to receive the tax credit. This includes interior demolition.
- Rehabilitation must follow CHAP's Historic Preservation Guidelines.
CHAP will review complete applications only. Applications that are incomplete, contain insufficient documentation, propose work that does not meet the CHAP Guidelines, or provide conflicting information will be delayed in the review and approval process until all necessary materials are required and the proposed project meets the CHAP Guidelines. CHAP staff may request additional documentation as needed. All applications should include the following:
All approvals will be issued in writing from the CHAP staff and may come in the form of a letter or email only. No other form of approval can be substituted. If a change to the project scope is necessary, applicants must submit a written or emailed amendment and receive written or emailed approval from CHAP prior to undertaking the change.
What do I submit when I have completed my project?
- Photographs: Applicants must provide a thorough photo documentation of the property, including photos of the all exterior elevations, the roof (if accessible), each interior room, and significant architectural details, including cornices, porches, storefronts, windows, trim, doors, staircases, railings and newel posts, fireplaces and mantels, transoms, and other unique features within the property. Photographs must be in color, measure at least 3x5, and must be taken in high resolution.
- Plans: If a building elevation or interior layout will be altered in any way, applicants must provide “existing” and “proposed” drawings for review.
- Scope of work: Each application must contain a detailed scope of work that thoroughly describes interior and exterior plans, proposed materials, treatments, and alterations. The scope of work should provide a comprehensive overview of the proposed project.
- Review Fee: A $50 review fee will be assessed for each application. The fee must be in the form of a check made to the Director of Finance, Baltimore City and must contain the property address in the memo line.
- If your property is located within a Baltimore City Historic District, a Notice to Proceed Application for the exterior work.
How do I receive the Historic Tax Credit?
- Final certification submissions can be made through the NEW ONLINE TAX CREDIT APPLICATION SYSTEM. For more information, please DOWNLOAD the Online Application Brochure.
- Final certification submissions must include the following:
- NEW! Final Certification Checklist
- Photographs: Final certification submissions must provide a thorough photo documentation of the completed rehabilitation and should correspond to the photos submitted in the original application. Photographs must be in color, measure at least 3x5, and must be taken in high resolution.
- Permits: Copies of all permits, including a Use & Occupancy Permit (if required) must be submitted upon completion of the project. Copies of all Notice to Proceeds for exterior work issued by CHAP must also be submitted if the project is within a Baltimore City Historic District. A list of permits can be obtained from the Baltimore Housing webpage.
- Cost Documentation: A detailed cost documentation of all expenses related to the rehabilitation of the project must be submitted at the end of the project. This documentation must demonstrate that at least 25% of the full cash value of the property was invested during the course of the project and that the total amount has been paid in full. Estimates of any kind cannot be accepted. Cost documentation must include material and labor costs and can also include architect, engineering, and design fees. The cost documentation cannot include property acquisition costs, utility bills, property tax bills, or other holding costs.
I have a large project where I will be investing at least $3.5 million dollars; what additional materials are required?
- CHAP will review your plans before you begin work and then review the actual work after its completion.
- Upon completion of the work, CHAP sends the approved application to the State Department of Taxation.
- The State Department of Taxation will advise Baltimore City's Department of Collections regarding the amount of tax credit and a new bill will be sent to you, the property owner.
- The Historic Tax Credit will appear on the tax bill as a “Special Credit.”
I am interested in other tax credits available, where can I look?
My property is located in an Enterprise Zone, am I also eligible for the City’s Historic Tax Credit?
- For projects over $3.5 million dollars in investment, the Baltimore City Department of Finance must also review and approve the project. Please contact CHAP Staff for the additional forms required for the Department of Finance review.
- If your property is located within an Enterprise Zone, you must submit an application to the BDC if you are interested in pursuing the Historic Tax Credit as well. The Historic Tax Credit is applied to areas of a project that are not eligible for the Enterprise Zone Credit.
Examples of Tax Savings
* Substantial improvement of a property does not necessarily result in a property value increase for tax purposes. All examples are for illustration purposes. Actual circumstances of assessments may vary from the example.
Example: An owner of a two-story building, who runs a business on the ground floor and resides on the top floor, decides to undertake substantial improvements. After the improvements, the property value increases from $283,000 to $458,000. The historic tax credit program saves the property owner as much as $40,000 in property taxes over the life of the credit.
Example: An apartment owner rehabs existing units and adds ten new units. The improvement and expansion increases the property value from $430,000 to $930,000. The historic tax credit may save the property owner as much as $117,000 in property taxes over the life of the credit.
Example: A hotel owner rehabs and doubles the number of existing rooms. The rehab and expansion increases the property value from $2.4 million to $3.6 million. The historic tax credit program may save the property owner as much as $280,000 in property taxes over the life of the credit.
Owner-Occupied Residential Property
Example: A rehabilitated kitchen and dining room benefits the entire family, but may also increase the property taxes. The home that was worth $60,000 is now worth $105,000. The home owner may save as much as $11,000 in property taxes over the life of the credit.
Residential Investment Property
Example: A developer purchases a vacant house valued at $15,000. After rehabilitation, the home is worth $135,000. The assessment increase brings with it higher property taxes. Since the historic tax credit is transferable, a new owner may save as much as $28,000 in property taxes over the life of the credit.
For further information about the Baltimore City Property Tax Credit for Historic Restorations and Rehabilitations contact the Commission for Historical and Architectural Preservation, 417 E. Fayette Street, 8th Floor, Baltimore, Maryland 21202, Phone (410) 396-4866
For information about the City and State rehabilitation loans contact the Home Ownership Institute, Department of Housing and Community Development, Suite 1125, 417 E. Fayette Street, Baltimore, Maryland 21202 Phone: (410) 396-3124.
For information about the State and Federal preservation loans, grants, and tax incentives
, contact the Maryland Historical Trust, Division of Historical and Cultural Programs, Third Floor, Department of Housing and Community Development, 100 Community Place, Crownsville, Maryland 21032-2032 Phone: (410) 514-7628 or email HistoricTaxCredit@baltimorecity.gov.