Historic Tax Credits & Programs
Motivated by a desire to safeguard cultural heritage, stabilize and improve property values, and to foster civic beauty, every level of government offers a program (or - in some cases- several programs) to offset a portion of the private costs of renovating and restoring historic properties. As a citizen of each, you are able and encouraged to apply for tax credits & incentives at each level.
Here's a look at the programs available to you:
CITY OF FREDERICK:
STATE OF MARYLAND:
The Maryland Historic Trust offers income tax credit for renovation work performed on buildings that are certified as historic. To qualify, a building must have at least one of the following designations:
- Individually listed in the National Register of Historic Places
- A contributing resource within a National Register Historic District
- A locally designated structure or contributing resource to a local historic district that the Maryland Historic Trust determines to be eligible for the National Register
The State tax credit program requires application prior to the commencement of the rehabilitation work. The Maryland Historic Trust review period typically runs approximately 30 to 45 days. Proposed work must meet the Secretary of Interior's Standards for Rehabilitation.
The state's incentive is administered through three programs with slightly varied application requirements:
Property owners of single-family, owner-occupied residencies can earn a state income tax credit up to 20% of eligible rehabilitation costs. The credit is capped at $50,000 in a 24-month period and projects must have a minimum of $5,000 of eligible expenses to qualify. For more information, click here.
The Competitive Commercial Tax Credit offers property owners a tax credit up to 20% of the eligible expenses (up to a total $3 million) for substantial rehabilitation projects. An additional 5% credit may be earned for high performance properties that achieve a LEED gold certification. As the name suggestions, submissions for this program are ranked against each other and the credit is ultimately awarded to the highest priority projects. For more information, click here.
The Maryland Historic Trust also includes a program for small commercial properties. Eligible small commercial projects may also receive a state income tax credit up to 20 percent of qualified rehabilitation expenditures. Targeting more modest rehabilitation projects, small commercial rehabilitation cannot exceed $500,000 in expenses and the credit is capped at $50,000 in a 24-month period. Eligibility also requires a building may not be used for more than 75 percent residential rental purposes. For more information, click here.
UNITED STATES OF AMERICA:
Administered by the National Parks Service, the Federal government offers two historic preservation income tax credit programs:
This federal tax program offers a 20% income tax credit to eligible projects. Buildings must be 'certified historic structures,' as determined by the National Park Service and all rehabilitation work must meet the Secretary of Interior's Standards for Rehabilitation.
The 20% credit is available for properties rehabilitated for properties rehabilitated for commercial, industrial, agricultural, or rental residential purposes, but it is not available for properties used exclusively as the owner's private residence.
Owners are encouraged to apply before they start work.
Under this program, a 10% income tax credit is available for substantial rehabilitation projects (exceeding $5000) of buildings placed in service before 1946. The building must be rehabilitated for non-residential use.
The program has specific physical tests for retention of external walls and internal structural framework it must also meet.
Maryland's State Historic Preservation Office serves as a contact point for these federal incentives and can provide appropriate application information.