Tax Credit Programs
Tax Credits for Historic Preservation
Are you planning to preserve, restore, rehabilitate, or renovate a historic property? First, you should probably learn the difference in the terms, (see the bottom of this page) and second you should investigate if there is an opportunity to apply for tax credits. The federal government, state government, and Washington County government offer tax incentives for work because it strengthens communities and protects our heritage. The first rule to remember is: All tax credits must be applied for and approved IN ADVANCE of any construction. If you have completed the task, there is virtually no opportunity to be reimbursed.
The state of Maryland offers a 20% credit up to $50,000 for owner-occupied properties and small commercial properties. There is also a competitive 20% or 25% commercial credit that is capped at $3million. In order to qualify for the credit, you must submit Part 1 and Part 2 of the application in advance of starting work. Part 1 certifies that the property is historic and Part 2 certifies that the scope of work is qualified.
The federal government offers a 20% credit for income-producing properties and Washington County offers a 10% credit for approved exterior repairs and a 5% credit of the costs of a new addition attached to an historic property. The state, federal and local tax credits may piggy back on each other. Don’t miss out on this valuable opportunity
Federal Tax Credits for Income Producing Properties (as of Jan 2015)
A 20% income tax credit is available for the rehabilitation of historic, income-producing buildings that are determined by the Secretary of the Interior, through the National Park Service, to be “certified historic structures.” The State Historic Preservation Offices and the National Park Service review the rehabilitation work to ensure that it complies with the Secretary’s Standards for Rehabilitation. The Internal Revenue Service defines qualified rehabilitation expenses on which the credit may be taken. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit. Learn more about this credit before you apply.
Each year, Technical Preservation Services approves approximately 1000 projects, leveraging nearly $4 billion annually in private investment in the rehabilitation of historic buildings across the country. Learn more about this credit in Historic Preservation Tax Incentives.
State Tax Credits for Historic Properties (as of Jan 2015)
Homeowners have the opportunity to earn a state income tax credit equal to 20 percent of qualified rehabilitation expenditures. The credit is capped at $50,000 in a 24-month period and must have a minimum of $5,000 of eligible expenses to qualify.
The state homeowner tax credit may be used with local historic tax credits, although the review by the Maryland Historicl Trust MHT is independent of local review and may not be waived or substituted for local approval.
The review period runs approximately 30-45 days after MHT receives a complete application and review fee.
Please read the Homeowner Application Instructions and all supporting materials prior to filling out the application.
Washington County Maryland Tax Credits (as of Jan 2015)
This tax credit may be granted against the amount of County real property taxes, based upon the amount expended by a taxpayer for restoration or preservation of an historic property. A property must be an historic site designated on the master plan for historic preservation, or within a historic district designated on the master plan for historic preservation. The tax credit shall be in an amount equal to ten percent (10%) of the owner’s expense for certain restoration and preservation of any existing structure up to the total amount of County real estate property taxes. A credit of five percent (5%) of the owner’s expense shall be allowed for new construction attached to an existing historic structure.
The credit shall be allowed for the tax year immediately following the work or any portion thereof is completed, and any unused portion of this tax credit, may be carried forward for as many as 5 tax years, after which the credit lapses.
For information, please contact the Washington County Planning Department at (240) 313-2430
Terms to know –
1. Preserve: To maintain a site’s existing form through careful maintenance and repair.
2. Conserve: To keep a place in a safe or sound state in such a way as to prevent exploitation, destruction, or neglect. This often refers to environmental and natural resources.
3. Cultural resource: Broadly, this is evidence of past human activity and includes places like buildings or old roads, battlefields, sacred landscapes, and historic artifacts or objects. They are generally considered non-renewable resources.
4. Reconstruct: To re-create an historic place that has been damaged or destroyed; to erect a new structure resembling the old by using historical, archaeological, or architectural documents.
5. Rehabilitate: To repair a structure and make it usable again while preserving those portions or features of the property that are historically and culturally significant.
6. Remodel: To change a building without regard to its distinctive features or style. This often involves changing the appearance of a structure by removing or covering original details and substituting new materials and forms.
7. Renovate: To repair a structure and make it usable again, without attempting to restore its historic appearance or duplicate original construction methods or materials.
8. Restore: To return a site to its original form and condition as represented by a specified period of time using materials that are as similar as possible to the original ones.
9. Stabilize: To protect a building from deterioration by making it structurally secure, while maintaining its current form.
10. Easement (as it relates to historic preservation): A voluntary legal agreement, typically in the form of a deed, which permanently protects a historic property.