How to Take Advantage of Historic Tax Credits in Frederick

Those who don’t know history, are doomed to ... miss out on a substantial tax credit opportunity!
— Edmund Burke, liberally translated by the City of Frederick's DED

Did you know that the City, CountyState, AND Federal levels of government all offer tax credit incentives for the restoration of properties designated as historic?

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 these tax credits at each level. 

Here's a look at the programs available to you..

 

City of Frederick:

Historic Preservation Property Tax Credit

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At the City level, tax paying property owners (both commercial and residential) are encouraged to apply for a property tax credit equal to 25 percent of expenditures incurred for exterior work contributing to the restoration of a structure within the designated Historic Preservation Overlay. 

To qualify:

  • Minimum expenditures must total at least $500 
  • the project must have prior Historic Preservation Commission approval (unless the work is eligible work on the Minor Rehabilitation List)

A more comprehensive overview of the types of eligible work can be found here.

As a tip, keep copies of your receipts through out the process, as they will be required within your application. Note, the labor costs of a project are only eligible when completed by licensed contractors. 

Applications - available here - are due on April 1st following the calendar year in which the expenditures were incurred 

Please call the City's Planning Department at 301-600-1499 for more information. 

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State of MARYLAND:

Maryland Heritage Structure Rehabilitation Tax Credit Programs

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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 

Unlike the City's incentive, 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. 

Applications are accepted year-round. 

Contact Megan Klem: megan.klem@maryland.gov, 410-697-9560: for more information. 

 

Owners of income-producing properties have the opportunity to earn a state income tax credit for renovating historic buildings through two different programs. 

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. Last year, eight awards (totaling $9 million) were granted state-wide - including one within the City of Frederick. 

Applications are due August 31st. 

Contact Collin Ingraham: collin.ingraham@maryland.gov, 410-697-9558: for more information.

 

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. 

Applications are accepted on a rolling basis until the annual program appropriate cap of $4 million is reached. 

Contact Megan Klem: megan.klem@maryland.gov, 410-697-9560: for more information.

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United States of America:

Historic Preservation Tax Incentives

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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.