Historic Tax Credits

Continuing on with our series of educational blog posts, this week will focus on historic tax credits overall.

Historic buildings that are listed on the National Register of Historic Places (NRHP) or eligible to be listed on the NRHP have the opportunity to apply for local, state, and federal historic tax credits. The value of the tax credit varies based on locality but is often somewhere between 10-20% of the income tax.  The Federal Historic Tax credit is for 20% of the Qualified Rehabilitation Expeditures (QRE) of the project cost.  QREs typically include soft and hard costs (architect fees, engineering fees, construction cost) of the building but exclude items that are associated with landscaping, new construction, or building acquisition.

In order to receive the historic tax credits all design and construction work must comply with the Secretary of Interior’s Standards, which you can ready more about in our previous blog post on them. 

In Maryland, the State Historic Tax Credit process is a competitive process that accepts applications once per year. The tax credit value is 20% of QREs for historic building renovations that do not pursue energy efficient upgrades and 25% for historic buildings that do. 

While getting listed on a register is helpful in being eligible for state and federal funding, it is important to note that building owners are not prevented from demolishing their historic building once it is on the National Register.  There are varying levels of protection based on the historic certification of a building so it’s important to know the difference and how the certifications apply to your structure. Read our previous blog discussing these levels in more depth.