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Frequently Asked Questions about the
Maryland Heritage Structure Tax Credit Program
Single-Family/Homeowner/Owner-Occupied
How long will it take for MHT to process my Part 1 and 2 once it is received?
Ordinarily the processing time is approximately 30 days. It may be longer or shorter depending on the volume of tax credit applications received at that time. MHT staff will contact you if we have questions about your application or if you need to provide additional information. If you wish to confirm your application has been received, MHT recommends you send it by a courier that tracks its packages or by USPS Certified Mail Return Receipt.
Qualifying for tax credits/refunds:
How do I find out if my property is eligible for the credit?
Your property is eligible for the credit if it is locally designated as a landmark, contributes to the significance of a locally designated historic district , or if it is listed on the National Register either individually or as contributing to a district. The Maryland Historical Trust (MHT) maintains a list of National Register properties; both individually listed and district properties. Contact Jan Gowing or visit the MHT website and look under “Sites and Inventories/National Register” to see if your property is on the list. Local planning offices maintain lists of locally designated historic properties. Contact your local planning office for details. If you are unsure how to get in touch with your local planning office, contact Scott Whipple.
How do I find out if my property contributes to the significance of a National Register or local historic district?
Nomination forms for both National Register and local historic districts may list contributing properties within the district boundaries. All nomination forms should contain information about the historic significance of the district and how the structures within that district contribute to its significance. Contact Jan Gowing or your local planning office (see contact information above) to request historic district documentation. Whether or not a structure contributes to the significance of a historic district is ultimately determined by the MHT based on all available documentation.
I am working on getting my property designated as a local landmark, but want to get started on the rehabilitation project now. Can I get underway before my property is officially designated?
Yes; however, the property may not be certified as a heritage structure (therefore qualifying for the tax credits) until it receives its official designation from the local jurisdiction. The tax credit program’s statute requires that the structure be officially designated, either by the local government or the National Register, by the end of the calendar year in which the rehabilitation project was completed. Failure to receive this designation by the required deadline negates an owner’s ability to claim a tax credit or refund for the completed project.
Is the credit fully refundable?
Yes, to the extent the credit exceeds the taxpayer’s tax liability.
Can a nonresident of Maryland claim the credit/refund?
Yes. The program has no restrictions on residency.
Can refunds be claimed on unused credits earned prior to July 1, 2001?
No.
What is the effect of government ownership of the property on which a rehabilitation occurs?
The statute expressly excludes structures owned by the state, political subdivisions, or the federal government from eligibility for rehabilitation credits. The credits are earned for the eligible rehabilitation of a “structure,” which means that rehabilitation credits can be earned on structures that are physically located on government real property if the government does not own the structure.
Is it possible for different components of a structure or property to be the subject of a phased rehabilitation that takes longer than 24 months?
There are no provisions in the statute for a “phased” rehabilitation. Each 24-month project should be self-contained. For owner-occupied residential structures, there are no consequences resulting from “phasing” a rehabilitation over several 24-month periods. The expenditure threshold of $5,000 is the same for each 24-month period.
How does the sale of a property affect the right to credits?
The sale of a property does not affect the rights to credits. The owner of the property at the time the rehabilitation was undertaken is entitled to the credits even if they sell the property.
Last year, I completed a rehabilitation project but only recently heard about the State tax credit program. Am I still eligible for the credit?
No. Completed projects cannot be accepted.
What if I want to upgrade my kitchen?
Amendments to the Heritage Structure Rehabilitation Tax Credit Program regulations adopted by the Maryland Historical Trust in February 2005, retroactive to January 3, 2005, among other things, clarify the definition of the term “rehabilitation.” The expanded definition is as follows: (a) “Rehabilitation” means the process of returning a structure to a state of utility, through repair or alteration, which makes possible an efficient use while preserving those portions and features of the structure and its site and environment which make the structure and its site and environment historically, architecturally, or culturally significant.(b) “Rehabilitation” does not include an alteration which is primarily remodeling. Example: An example of projects that the MHT considers to be primarily remodeling is the replacement of non-historic bathrooms or kitchens or both. In these cases, existing bathrooms and kitchens are in good repair and utility and are replaced for purely aesthetic or personal reasons (e.g., replacement of marble countertops with granite, oak cabinets with cherry, or a 4-burner gas range with a 6-burner range). As noted above, the overall purpose of the Heritage Structure Rehabilitation Tax Credit Program is to “return a structure to a state of utility.” Many bathroom and kitchen replacement projects include no other work that would be considered rehabilitation. The MHT believes that remodeling of a functional space merely continues the utility of the space and does not “return” the structure to a state of utility. The work therefore does not qualify as rehabilitation work.
Projects described in a proposed plan of rehabilitation (Part 2 Application) and determined by the MHT to be primarily remodeling will not qualify for the tax credit program. Projects that include appropriate reconstruction of severely deteriorated or inoperable spaces, including kitchens and bathrooms, will continue to be considered rehabilitation work and eligible for tax credits.
I have received tax credits for a rehabilitation project certified by the MHT one year ago. If I plan to do additional work this year that probably would not conform to the Secretary’s Standards, do I risk losing all or a portion of the credits already earned?
Yes. Amendments to the law adopted by the Maryland General Assembly in 2001 included a tax credit recapture provision. If additional work is performed on a structure that has received tax credits for a certified rehabilitation project, and that work, if performed as part of the certified rehabilitation project, would have made the project ineligible for certification, the credits will be recaptured. If the disqualifying work is performed during the year in which the rehabilitation was completed, 100% of the credit will be recaptured; if during the first full year after the rehabilitation was completed, 80% will be recaptured; if during the second full year, 60% will be recaptured; if during the third full year, 40% will be recaptured; and after the fourth full year, 20% will be recaptured.
My local historic preservation/district commission (HPC/HDC) has approved my rehabilitation project. Do I also need to get MHT’s approval to receive the tax credits?
Yes. While it welcomes input from HDC/HPCs, the MHT must review all applications for the Heritage Preservation Certification Tax Credit Program. The MHT is the only government agency charged with the administration of the tax credit program and is solely responsible for certifying that both proposed and completed projects meet the Secretary of the Interior’s Standards for Rehabilitation (Standards). Since HDC/HPC reviews are concerned with exterior alterations only, they do not consider interior rehabilitation work that may qualify for tax credits/refunds. If heritage preservation tax credits are being considered for a project, it is strongly recommended that you contact the MHT prior to the start of any work to ensure that your project complies with the Standards. Failure to do so could result in the denial of your tax credit application.
Qualifying rehabilitation work:
Are architectural fees eligible?
Yes. Architectural, engineering, and similar consultant fees, including tax credit consulting fees, are eligible.
What about acquisition costs, financing charges and building permit fees?
These costs are not eligible.
Are plumbing, HVAC and electrical system upgrade costs eligible?
Yes, as long as the work does not negatively impact historic elements of the interior or exterior.
Are kitchen and bathroom rehabilitation costs eligible?
Yes. The cost for new appliances is also eligible when part of an overall rehabilitation scheme that is not determined by MHT to be remodeling only.
Are landscaping costs eligible?
The costs associated with the restoration of significant historic landscape features, such as parterre gardens, walls, or garden walks, are eligible when there is adequate documentation as to the feature’s historic significance. All other landscaping costs are not eligible.
Are patios, back decks, roof decks, or similar new construction eligible?
No. New construction does not qualify.
Are rehabilitation costs for barns, garages, and other outbuildings eligible?
If these structures are historically associated with the primary structure and contribute to the significance of the site, then the rehabilitation costs are eligible. Non-historic structures are not eligible.
Can I install skylights to light interior rooms?
Skylights are usually discouraged; however, they are reviewed on a case-by-case basis.
Are interior finishes eligible?
Capital expenditures are eligible for the credit. For the interior, this usually means finishes that become part of the structure. Eligible costs may include repair or restoration of wainscoting, mantles, interior shutters, molding and plaster. Finishes that are not eligible include, but are not limited to, carpet, drapery, or mirrors. Consult MHT staff for a final determination of eligibility.
I am rehabilitating my 1885 Queen Anne structure that has a 1960s addition. Is work done on the non-historic addition eligible?
Yes. MHT recognizes that buildings change over time. Reviewers will judge all proposed changes to the building against the appearance of the building before the rehabilitation project began. Work done within the existing walls of the structure, both historic and non-historic, is eligible.
My historic house had vinyl siding installed in the 1970s. If I am not planning to remove it as part of my rehabilitation project, will I still be eligible for tax credits on other work that meets the Secretary’s Standards?
Yes. MHT will not require owners to replace vinyl or aluminum siding with a more appropriate historic treatment if there is no work planned for this feature as part of the overall project.
Can I use historic materials obtained from an architectural salvage shop?
Yes, if the architectural feature used replaces a missing original feature of the same architectural style and period.
If the house is damaged and I am reimbursed by my insurance company to pay for the repairs/restoration, can I include those expenses in my Total Allowable Project Costs on Part 3 and claim a credit on them?
No. Expenses for which you are reimbursed by an insurance company cannot be claimed.
Revised January 2006
For questions about the Maryland Heritage Structure Tax Credit Program,
contact MHT’s Office of Preservation Services at 410-514-7628.
Last updated: July 5, 2006
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