County Historic Tax Credit FAQs
County Council Bill No. 151-05, which took effect on January 30, 2006, offers a tax credit for the rehabilitation of designated historic structures. The text below provides answers to frequently asked questions pertaining to the County rehabilitation tax credit program.
- How can I learn if my property is eligible to apply for this program?
- What kinds of improvements to qualified historic properties are eligible in the County program?
- Can the same property receive both the County tax credit and a credit or refund through the Maryland Rehabilitation Tax Credit program?
- What are the terms of the County tax credit for residential historic properties?
- What are the terms of the County tax credit for commercial historic properties?
- How does the rehabilitation credit relate to the property's assessment?
- What is the procedure for obtaining the County tax credit?
- Who can tell me more about the County program?
The Baltimore County property tax credit is available for rehabilitation expenditures on “historic resources,” which are defined as properties that are either:
- On the Baltimore County Final Landmarks List *, or
- Individually listed on the National Register of Historic Places, or
- “Contributing” properties located within a National Register Historic District or within one of the County Historic Districts enacted by the Baltimore County Council. Contributing properties are those which contribute to an understanding of the district’s significance by being historically or architecturally significant, individually, or by being architecturally compatible or functionally related to the other historic properties in the district. The County’s interpretation of which properties are contributing may sometimes differ from the State’s.
* Note: Delineation of a historic environmental setting (HES) is required to process a tax credit application for a Final Landmarks List structure. The HES “means the property or lot or portion thereof, as delineated by the Commission, which is historically, architecturally, archeologically, or culturally connected to the historic significance of a landmarks structure.”
The tax credit program is intended to encourage and facilitate the rehabilitation of historic properties. Rehabilitation is defined as the process which returns the historic structure “to a state of utility through repair or alteration that allows for the efficient use of the structure while preserving those portions and features of the structure and its site and environment that are historically, architecturally, or culturally significant."
The Baltimore County program has two components – residential and commercial. These have the same property eligibility standards (see question 1), but differ in the amount and form of the credit. In no case, however, can the eligible work include expenditures for “new additions constructed as part of, or adjacent to a historic resource.” It is also essential to understand that approval by the Baltimore County Landmarks Preservation Commission, or staff * must be obtained before beginning any work on the property.
For residential properties the eligible work “does not include alterations that are primarily remodeling projects such as the replacement of a functional kitchen or bathroom,” but eligible expenditures do include:
- Exterior rehabilitation, including roofs, windows, stone and brick work, wood siding or shingles, and lead paint removal;
- Interior rehabilitation, including structural fortification, lead paint removal, and heating, air conditioning, electrical, and plumbing work.
Commercial properties include office, retail, industrial, residential condominiums, and income-producing residentially-used properties. The eligible work on commercial properties includes “all exterior and interior rehabilitation work.”
As part of the approval process the owner’s application is reviewed by the Landmarks Preservation Commission or staff *, which must determine whether the proposed work would be "in conformance with The Secretary of the Interior's Standards for Rehabilitation.” In essence, these standards stipulate to repair historic features, or replace them in kind. The complete set of standards are available elsewhere on this web site and are posted, with illustrations and explanatory text and illustrations, on the web site of the National Park Service.
Owners contemplating significant changes to their historic property are strongly advised to consult with a preservation architect early in their project. A list of qualified preservation architects is available from the Maryland Historical Trust.
To read the County law, please go to Baltimore County Code, 2003 and open to Section 11-2-201.
* Note: County applications accompanied by an approved State Part 2 application can be approved by staff.
* Same as above
3. Can the same property receive both the County tax credit and a credit or refund through the Maryland Rehabilitation Tax Credit program?
Yes, if the rehabilitation project meets the eligibility requirements of each program (which are generally the same), and complies with the standards of each agency (both of which use the Secretary of the Interior’s Standards). It is especially important to contact the historic preservation staff in the Department of Planning as early as possible, to coordinate the separate approvals needed for each program. The Maryland Historical Trust provides full information, and application forms for the state program.
The tax credit is 20 percent of the expenses for eligible rehabilitation work, provided that the expenses total at least $1,000. The credit applies against the County real property tax bill, beginning in the next tax year after the year in which the work “or any part” is completed and is certified as complying with the County standards. Any unused part of the total credit may be carried forward into as many as 10 subsequent tax years and is fully transferable to a new owner of the property for the remaining life of the credit.
The tax credit does terminate, however, if the property is altered (before the end of the ten years) so that it no longer complies with the rehabilitation standards by which the property obtained eligibility, or if the property is removed from the Landmarks List.
For commercial historic properties, the rehabilitation tax credit amounts to the difference between the assessed value before the rehabilitation work began and the increase in assessment attributable to the rehabilitation work. In order to generate a reassessment the work has to be significant – generally in excess of $50,000 (note also question 6). The credit may not, however, exceed the actual amount of the tax levied on the property in any tax year.
The credit continues, at the same amount each year, for a total of 10 subsequent tax years. The credit is fully transferable, for the remaining life of the credit, to any new owner of the property.
As with residential properties, the tax credit does terminate if the property is altered (before the end of the ten years) so that it no longer complies with the rehabilitation standards by which the property obtained eligibility, or if the property is removed from the Landmarks List (if applicable).
Please note that the granting of a tax credit does not affect or prevent changes in assessment (and the property taxes consequently due) attributable to any other work on the property or to the State's triennial review and reassessment program attributable to an overall increase in property values.
For residential properties, the approved credit is a fixed amount of money from which the owner can draw, over a period of up to ten years, to reduce the annual County property tax payable on the property.
For commercial properties, the credit functions essentially as a cap on the assessment of the portion of the property that was subject to the rehabilitation work. It prevents the owner from being penalized, through the property tax, for a ten-year period, for having done the work and fulfilled the law’s intention that historic buildings should be rehabilitated to continue in productive use.
There are essentially five steps. The first is optional but highly recommended. The other four deal with the mandatory elements in the County law.
Step 1. Informal consultation. Persons intending to seek the county tax credit are strongly advised to schedule an informal meeting with County historic preservation staff in the Department as early as possible in preparing the project's details. Staff will advise on important aspects, such as:
- Basic determination on whether or not the property is eligible for the program, and, if not, whether or not the ineligibility can be overcome.
- Elements of the proposed rehabilitation work that may be regarded as inappropriate or ineligible based on the County law or the Secretary’s Standards
- Process and schedule for obtaining approval from the LPC or staff for the proposed work and for the issuance of the relevant County building permit(s)
- Coordination for review and approval from the Maryland Historical Trust (if the Maryland Rehabilitation Tax Credit program will also be used)
- Procedures and records for obtaining County approvals at the end of the project
- Obtaining the Application forms for Parts I, II, and III.
Step 2. Part I Application. An application must be submitted on which the Department makes the formal determination that the property constitutes a “historic resource” eligible to participate in the program. This may be submitted simultaneously with the Part II Application if the applicant has already been found (through the discussion in Step 1) to be eligible.
Step 3. Part II Application. An application must be submitted “to the [Landmarks Preservation] Commission with a detailed description of the proposed rehabilitation work.” If the Commission finds that the work qualifies “as eligible rehabilitation work … and [is] in conformance with the Secretary of the Interior’s Standards,” the Commission issues a certificate of appropriateness or notice to proceed. The applicant can then proceed to obtain the building and other necessary county permits and complete the work in accordance with the certificate/notice.(Note: Applicants, who submit an approved State Part 2 application, along with their County application, can be approved by staff.)
Step 4. Part III Application. After completing the rehabilitation work, a Part III Application is submitted to the Department. Planning verifies that the completed project is in conformance with the work described and approved in the Part II Application and that all necessary building permits were obtained. Subsequently, the Part III Application is forwarded to the Budget Office for final action.
If the Department finds that the work is not in compliance, the LPC, at its next meeting, may affirm or reverse Planning’s determination. The Department is bound by the Commission’s decision and must certify the decision within 5 days to the Budget Director.
Step 5. Final action. Within 30 days after receiving the certification from Planning, the Budget Director must grant or deny the application and notify the applicant of the decision.
Please contact Vicki Nevy in the Department of Planning at email@example.com, or 410-887-3495.
Revised April 22, 2013