SMART FAQ About Baltimore City Tax Incentives

Baltimore has a strong economy and job market, and in an effort to attract more homeowners and real estate investors to Baltimore city, various agencies offer property tax credit programs. Tax credit programs include:

• Newly Constructed Dwelling Tax Credit
• Rehabilitated Vacant Dwelling Tax Credit
• Home Improvement Tax Credit
• Historic Landmarks and District Tax Credit
• Maryland Sustainable Communities Tax Credit Program

Read each Baltimore City tax credit summary below, and visit the agencies’ webpages to learn more.

Newly Constructed Dwelling Tax Credit

The Newly Constructed Dwelling Tax Credit is administered by the Baltimore City Department of Finance. Qualified owners receive 50% tax credit in the first year, which reduces by 10% each subsequent year ending with a 10% credit in the fifth year.

To qualify:

• The owner occupies a new construction.
• Building permit was issued after October 1, 1994.
• Owner applies for the credit within 90 days of the closing and title transfer.

To learn more, visit the property tax credit webpage.

Rehabilitated Vacant Dwelling Tax Credit

The Rehabilitated Vacant Dwelling Tax Credit is administered by the Baltimore City Department of Finance, encouraging the rehab of vacant properties in Baltimore City. The five-year reduction in assessment increases due to rehab. Qualifying owners receive 100% credit in the first year, which reduces by 20% each subsequent year for five years, ending at 20% in the fifth year.

Qualifying properties:

• Have up to four dwelling units within it
• Have been vacant and abandoned for at least one year

To learn more, visit the property tax credit webpage.

Home Improvement Tax Credit

The Home Improvement Tax Credit is administered by the Baltimore City Department of Finance and incentivizes owners to improve their properties. Qualifying owners receive a five-year reduction in tax increases caused by the improvements they completed. Owners receive 100% credit in the first year, which reduces by 20% each subsequent year for five years, ending with 20% in the fifth year.

To learn more, visit the property tax credit webpage.

Historical Landmarks and District Tax Credit

Baltimore City has almost 70 neighborhoods designated as historic districts, comprised of more than 50,000 residential and commercial buildings. The Historic Landmarks and District Tax Credit is administered by the Baltimore City Commission for Historical and Architectural Preservation (CHAP) and is available for historic properties in both the Baltimore City and National Register Historic District as well as for individual Baltimore City and National Register Landmarks. The tax credit aims to offset any increase in Baltimore City taxes that occur following a substantial, CHAP-approved rehabilitation project.

Other important components of this program:

• The tax credit is a dollar amount that is subtracted from an owner's real property tax bill each year for a total of 10 years.
• The program requires that the owner invests at least 25% of the full cash value of the property into a rehabilitation project that both qualifies for this project and is approved.
• All work must be reviewed and approved before any work begins, and the work must meet the CHAP Historic Design Guidelines.

To learn more, visit the CHAP webpage. Read more about Baltimore’s historic districts here.

Maryland Sustainable Communities Tax Program

The Maryland Sustainable Communities Tax Credit Program is administered by the Maryland Historical Trust (MHT) and is available to “certified historic structures.”

Properties considered as certified historic structures include:

• Individually listed in the National Register of Historic Places;
• One that contributes to a National Register Historic District; or
• A locally designated structure or a resource that contributes to a local historic district and that MHT determines to be eligible for the National Register.
  

Details about this program include:

• The credit is a one-time, state income tax credit that equals 20% of qualified rehabilitation expenditures.
• The credit is capped at $50,000 in a 24-month period.
• Owner must have at least $5,000 in eligible expenses to qualify.
• The property must be an owner-occupied, single-family residence to qualify.
• All work must be review and approved by MHT before work can begin.
• All work must meet the Secretary of the Interior's Standards for Rehabilitation.
• Commercial properties are also eligible for this credit.

For more information, call 410-514-7628 or visit the Maryland Historical Trust webpage.

For additional information on this topic contact Evelyn Miller, Partner, at 202-753-7400.

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