The Heritage Preservation Tax Credit Program, administered by the Maryland Historical Trust, provides Maryland income tax credits equal to 20% of the qualified capital costs spent on the rehabilitation of a “certified heritage structure” or “contributing structure.” Most homes in Guilford qualify as “contributing structures” (generally those over 50 years in age).
Many Guilford residents have applied for and received the state tax credit. When planning renovation work that may qualify, it is important to consider the following:
- Application must be made to the Maryland Historical Trust and approved before the work is undertaken.
- The rehabilitation expenditure must exceed $5,000 in a 24-month period and the rehabilitation must conform to the Secretary of Interior’s Standards for Rehabilitation.
- The application forms are extensive and require some research and planning. However, the full credit against state tax obligation is a valuable reward and shouldn’t be ignored when undertaking a big ticket item like a roof and other house elements that require renovation or replacement. If the approved credit is not immediately used or used in entirety, it can be carried over. If the credit is greater than the tax obligation, a refund may be claimed in the amount of the excess.
- In 2005 the State revised the tax credit regulations disqualifying costs for projects that are considered to be primarily remodeling. This has disqualified existing bathrooms and kitchens that are in good repair and utility and are replaced for purely aesthetic or personal reasons. Projects that include appropriate reconstruction of severely deteriorated or inoperable spaces, including kitchens and bathrooms, continue to be considered rehabilitation work and are eligible for tax credits.
- Instructions and the application for state tax credits are found on the web page of the Maryland Historical Trust at the following link:
- For all exterior changes, an application must be submitted to the Guilford Association’s Architectural Committee whether or not tax credit is sought.
Baltimore City Historic Restoration and Rehabilitation Tax Credit.
In Baltimore, local property tax credits also are available for the rehabilitation of homes in historic districts or designated historic structures. The credit is an offset of property taxes owed computed as a percentage of the rehabilitation expenditure (up to ten percent), or an amount equal to the increase in property taxes resulting from the rehabilitation improvements. The credit is given for a period of up to ten years. However, there is a significant threshold for eligibility. You must invest a minimum of 25% of the full cash value of your property (Land and Improvements). Your restoration or rehabilitation plans must be reviewed and approved by CHAP before you begin any work on your building, if you wish to receive the tax credit. The application is available on the CHAP web page at the following link: http://www.ci.baltimore.md.us/government/historic/taxcredit.php
If you have questions about tax credits, contact the Association’s Architectural Committee.