If you’re thinking of doing restoration work on a historic building, it’s important to take potential tax credits into consideration. Last week we talked about tax credits offered by Baltimore City for historic building preservation. This week, let’s take a look at tax credits you may be eligible for from the state of Maryland.
Maryland State Tax Credits
The state of Maryland offers two tax credits for commercial restoration: the Competitive Commercial Tax Credit and the Small Commercial Tax Credit. Both can be used in conjunction with local and federal tax credits.
Competitive Commercial Tax Credit
From the Maryland Department of Planning’s Maryland Historical Trust:
Owners of income-producing properties have the opportunity to earn a state income tax credit (capped at $3 million) that is equal to 20 percent of eligible rehabilitation expenses for substantial rehabilitation projects. Substantial rehabilitation projects are defined as projects with eligible expenses that exceed the greater of the adjusted basis value of the structure or $25,000.
The building must be income producing and must be a certified historic structure in order to qualify for the tax credit. This means it must have one (or more) or 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 within a local historic district that MHT determines to be eligible for the National Register
- Located within and certified as contributing to the significance of the Certified Heritage Area
Small Commercial Tax Credit
This is designed for smaller projects that have a hard time competing for the larger Competitive credit. Like the Competitive credit, projects eligible for the Small Commercial tax credit, “may earn a state income tax credit equal to 20 percent of qualified rehabilitation expenditures.”
In order to qualify for this credit, the rehabilitation must:
- Not exceed $500,000 in total qualified rehabilitation expenses
- Not be used for more than 75 residential rental purposes
In addition, “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.”
For more information about Maryland state tax credits for historic building preservation, including information on the next tax credit workshop (in Hagerstown on April 23rd at 6:30 pm) visit the website of the Maryland Historical Trust.
About Mahogany, Inc.
Mahogany, Inc. is a general contractor specializing in quality construction for projects across a wide range of industries. Located in southwest Baltimore, we employ 100 persons, and are one of the largest minority owned businesses in the state of Maryland. Make sure to check back with our blog every week for the latest industry related information. For more information, you can contact us at 410.727.0334, or email us. We look forward to hearing from you!