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Maryland Rehabilitation Tax Credits
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 expended in the rehabilitation of a “certified heritage structure.”
A certified heritage structure can include structures:
individually listed in the National Register of Historic Places;
designated as a historic property under local law and determined by the Director to be eligible for listing on the National Register of Historic Places;
located in a historic district listed in the National Register of Historic Places or in a local historic district that the Director determines is eligible for listing on the National Register of Historic Places and certified by the Director as contributing to the significance of the district; or
located in a certified heritage area and certified by the Maryland Heritage Areas Authority as contributing to the significance of the certified heritage area.
The credit is available for owner-occupied residential property as well as income-producing property. The rehabilitation expenditure in a 24-month period must be substantial, exceeding $5,000 for owner-occupied residential property, and the greater of the adjusted basis of the structure (generally the purchase price, minus the value of the land, minus any depreciation taken) or $5,000 for all other property. The rehabilitation must conform to the Secretary of the Interior's Standards for Rehabilitation and must be certified by the Maryland Historical Trust. If the credit exceeds the taxpayer's tax liability, a refund may be claimed in the amount of the excess. Additionally, organizations exempt from taxation under Section 501(c)(3) of the Internal Revenue Code are also eligible for a refund.
Important Notice
FY 2009 Commercial Rehabilitation Tax Credit Applications
Now Available!
The FY 2009 Commercial Heritage Preservation Certification Application package is now available. Revised documents include the FY 2009 Application, Application Instructions, Application Work Sheet, Commercial Application Submittal and MHT Rating and Ranking Procedures; and Frequently Asked Questions. Please review each of these documents as they contain revisions that may effect the preparation of the Commercial application. Please note that the FY 2009 Commercial Application may now be filled out on screen. Please refer to the Application Instructions for details.
The last day that the Maryland Historical Trust will accept applications for the FY 2009 Heritage Structure Rehabilitation Tax Credit Program is June 30, 2008. All Part 1 and Part 2 applications must be postmarked no later than midnight on June 30th or they will not be considered for FY 2009 tax credit reservations. There will be no exceptions.
Early contact with the Maryland Historical Trust’s Rehabilitation Tax Credit Unit is recommended to ensure that the project being proposed meets the Secretary of the Interior’s Standards for Rehabilitation. Applications for proposed projects that arrive after June 1st may not be reviewed by MHT staff in time to make changes should they be necessary to comply with the Standards.
Please contact Michael Day or Collin Ingraham with questions.
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***SPECIAL OPPORTUNITY***
REHABILITATION LOANS NOW AVAILABLE
TO TAX CREDIT APPLICANTS
The Maryland Historical Trust is now offering low-interest rehabilitation loans to users of the Heritage Preservation Tax Credit Program. For additional information or to apply, please follow this link:
The Historic Preservation Loan Program
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***IMPORTANT ANNOUNCEMENT***
FOR
HOMEOWNER TAX CREDIT APPLICATIONS
1. MHT to charge a fee for the review of Homeowner Heritage Preservation Certification Tax Credit Applications.
As authorized by changes to the Heritage Structure Rehabilitation Tax Credit Program passed by the Maryland General Assembly during its 2007 session, and signed into law by Governor Martin O’Malley, the Maryland Historical Trust will charge a fee for the review of Homeowner Heritage Preservation Certification Tax Credit Applications beginning July 1, 2007. The fee has been set at 1% of the amount of the tax credit for which a single-family, owner-occupied rehabilitation would be eligible based on the greater of the estimated or final qualified expenditures for the rehabilitation project.
The fee will be due and payable: 1) $10 at the time of the Part 2 Application submission; and 2) the balance prior to the Trust’s approval of the Part 3 Application.
2. Tax credit applications for projects completed without prior MHT review and approval.
The law governing the State tax credit program defines “qualified rehabilitation expenditures,” in part, as “any amount that is expended in compliance with a plan of proposed rehabilitation that has been approved by the [MHT] Director.” This provision of the law means that rehabilitation expenditures for work that is undertaken prior to the Director’s approval of the Part 2 are ineligible for tax credits. NOTE: Costs for architectural, engineering, consultants’ services and exploratory demolition necessary to prepare the application remain eligible for the credit.
Heritage Rehabilitation Certification Applications requesting plan approval (Part 2) or final tax credit certification (Part 3) for rehabilitation projects that have been substantially completed prior to review and approval by the Director will be returned to the applicant without review.
3. Revised State tax credit regulations disqualify costs for projects that are considered to be primarily remodeling.
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.
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Maryland Heritage Structure Rehabilitation Tax Credit Program Statute
Maryland Heritage Structure Rehabilitation Tax Credit Program Regulations
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Copies of the Heritage Preservation Certification Application and Instructions may be obtained from this website via the links listed above. For questions about the application process or your rehabilitation you may contact MHT’s Office of Preservation Services at 410-514-7628.
Last updated: April 30, 2008
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