DEVELOPER PROGRAMS
Baltimore City CHAP Historic Property Tax Credit Program
(Baltimore City Historic Property Tax Credit)
This program generates a 10-Year 100% Property Tax Credit on the assessment value of your improvements.
The maximum annual value of the CHAP tax credit is equal to the city tax rate times (the appraisal after the house is completed minus the appraisal prior to the improvements). The actual annual value is limited to the increased assessment value.
To Qualify:
- You must spend 25% of the current assessed value
- Do not increase the footprint of the house by more than 20-30% depending on the current square footage.
Highlights:
- This property tax credit is the most valuable Baltimore City offers and it will make a substantial difference in your mortgage payment
- The CHAP Credit reduces the expense of rental properties and increases their value when dividing annual income by a cap rate.
- The CHAP Credit passes on to your Buyer when flipping a house. This allows more potential buyers to qualify for your house and it helps you to sell the house for more money because the Buyers monthly mortgage payments include Principal, Interest and property taxes. Reducing the Property Taxes allows an equivalent mortgage payment to have a higher principal (sale price) amount.
Example:
The current (pre-rehab) appraisal is $150,000 and if the post rehabilitation appraisal increases to $400,000….
the annual savings will be ($400,000-$150,000) = $250,000 *2.248%= $5,620 PER YEAR. If you use the CHAP program and your neighbor does not use it, you could sell your house for about $90,000 more and your home will have the same mortgage payment as your neighbor’s home, or your Buyer’s mortgage on a $400,000 home would be similar to a mortgage for a $310,000 home without the CHAP credit. The 10-year value of the credit for whoever owns the house is estimated to be $56,200 for your rentals.
Maryland Historical Trust Historic Revitalization
Tax Credit Programs
BENEFIT
This program generates a bottom-line state tax refund of 20% of Qualified Rehabilitation Expenditures (QREs) to be used by the Owner’s Company members per their pro-rata share ownership in the company for the calendar year for which you finish the rehabilitation project. Any individual’s excess tax credits will be given to each owner in your personal state income tax refund check.
MAINTAINING YOUR STATUS FOR 5 YEARS
Once a tax credit recipient, you are required to keep the building for which you received a credit in compliance with the Secretary of the Interior's Standards for Rehabilitation for five years. If after receiving a tax credit, you do something to the building that does not adhere to these Standards, you must give back a portion of the tax credits that you received, this is known as recapture
It's An All Or None Program
Last, it is important to consider that this program is an all or none program. What that means is that you can’t just decide to do some renovations on your property that qualify and receive the credit on those items and not other renovations that would not qualify. All renovations must qualify and meet the Secretary of the Interior’s Standards for Rehabilitation. If you complete 100 tasks in your renovations and 1 of the completed tasks violates the Standards, you will not receive credit for the other 99 tasks that met the Standards. This is one reason why we recommend using a consultant to help assist you in completing this process so as to remove the guess work.
Maryland Historical Trust Historic State Small Commercial Revitalization Tax Credit Program
As an investor, you must spend at least $5,000 to qualify for this program.
BENEFIT
This program generates a bottom-line state tax refund of 20% of Qualified Rehabilitation Expenditures (QREs) to be used by the Owner’s Company members per their pro-rata share ownership in the company for the calendar year for which you finish the rehabilitation project. Any individual’s excess tax credits will be given to each owner in your personal state income tax refund check.
To Qualify:
- You must spend at least $5,000.00 in a 2-year period
- Rental properties must have at least 25% of the square footage used for anon-residential purpose
- Houses being flipped must be bought by an owner-occupant titled in their personal name.
APPLICATION PERIOD
Contact us when this program is opening up for new applications
TAX CREDIT TAX CREDIT CAP LIMITS
The maximum tax credit is $50,000 on $250,000 of QREs.
Maryland Historical Trust Historic State Large Commercial
Revitalization Tax Credit Program
As an investor, you must spend at least your adjusted basis on your rehabilitation during a twenty-four month period in order to qualify for the program. The investor credit is a competitive credit and Investors are not guaranteed the credits as the State of Maryland has imposed a budgetary cap on the amount of credits that may be awarded to investors in a given fiscal year.
BENEFIT
This program generates a bottom-line state tax refund of 20% of Qualified Rehabilitation Expenditures (QREs) to be used by the Owner’s Company members per their pro-rata share ownership in the company for the calendar year for which you finish the rehabilitation project. Any individual’s excess tax credits will be given to each owner in your personal state income tax refund check.
ONE APPLICATION PERIOD FOR TAX CREDIT
Investors applying for the Maryland Historical Trust Historic Revitalization Large Commercial Tax Credit Program must apply each year by August 31st. Each year the Governor allocates an amount to the program known as the “Budgetary Cap.” Whatever the fiscal year cap is, let’s say $10M for example, each project will be evaluated on its merits in a competitive process for a maximum of $3M. We recommend engaging us by the end of the spring months to be thorough.
UNDERSTANDING CREDIT CAP LIMITS
In other words, investors are only eligible to receive up to three million dollars per project
Federal Historic Rehabilitation Tax Credit Program
As an investor, you must spend at least your adjusted basis on your rehabilitation during a twenty-four month period in order to qualify for the program.
BENEFIT
This program generates a bottom-line federal tax credit of 20% of Qualified Rehabilitation Expenditures (QREs) to be used by the Owner’s Company members per their pro-rata share ownership in the company in five equal installments for the five calendar years starting the year for which you finish the rehabilitation project.
These tax credits were designed to be used by Real Estate Professionals.
We urge you to check your ability to use these tax credits with your tax professional.
APPLICATION PERIOD FOR THIS PROGRAM
You may apply anytime, yet we suggest you get started during your pre-development period.
TAX CREDIT TAX CREDIT CAP LIMITS
There are no tax credit cap limits.
MAINTAINING YOUR STATUS FOR 5 YEARS
Once a tax credit recipient, you are required to keep the building for which you received a credit in compliance with the Secretary of the Interior's Standards for Rehabilitation for five years. If after receiving a tax credit, you do something to the building that does not adhere to these Standards, you must give back a portion of the tax credits that you received, this is known as recapture.