Combine CHAP, MHT and Federal Historic Tax Credits

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Direct answer

Often yes, with limits. The CHAP property tax credit and the Maryland Historical Trust's 20% income tax credit are separate programs reviewed by separate agencies, and an owner can use both on one project. The federal 20% credit applies only to income-producing property, so owner-occupied homes do not qualify for it.

I am Ed Drost, a Maryland State Certified Residential Appraiser. I appraise CHAP projects, but I am not a tax preparer or an attorney, and the state and federal credits depend on your tax situation. My job here is to tell you how the programs fit together so you ask the right questions. One point I want to be clear about: some online summaries tell homeowners they can stack the federal credit too. Under the National Park Service's rules, an owner-occupied home does not qualify. This is part of our Baltimore appraisal Q&A series. For the full process, see the CHAP Historic Tax Credit Guide.

How do CHAP, the Maryland credit and the federal credit compare?

The three historic tax credits for Baltimore rehabilitation projects
	Baltimore CHAP	Maryland (MHT) homeowner credit	Federal historic credit
What it reduces	City property tax	Maryland income tax	Federal income tax
Size	City tax on the increase in value, for 10 years	20% of qualified costs, minimum $5,000, capped at $50,000 per 24 months	20% of qualified rehabilitation costs
Minimum spend	25% of the property's pre-rehabilitation full cash value	$5,000	Must exceed the building's adjusted basis (substantial rehabilitation test)
Owner-occupied home?	Yes	Yes	No. Income-producing property only.
Who reviews it	CHAP and the Department of Finance	Maryland Historical Trust	Maryland Historical Trust, then the National Park Service
Deadline	No new applications after December 31, 2027	Check with MHT	Check with NPS and MHT

The MHT figures come from the Trust's homeowner credit page. Ask MHT for the current rules before you rely on any of them, because the cap, the eligibility test and the funding can change.

Can you really stack CHAP with the Maryland credit?

In general, yes. The programs are independent. CHAP gives a property tax credit, and MHT gives an income tax credit against Maryland tax. Each agency reviews the work for its own standards. That means one set of work can satisfy two different reviews, and you need approval from both before you start.

A simple illustration, with invented round numbers, shows why owners like the combination. Suppose an owner-occupant spends $150,000 on qualified work on a house appraised at $200,000 before and $350,000 after, and qualifies for both.

Illustration: one project, two credits (not a prediction)
Credit	How it is figured	Result
Maryland MHT	20% of $150,000 in qualified costs, subject to the $50,000 cap per 24 months	$30,000, as an income tax credit
Baltimore CHAP	$150,000 increase × $2.248 per $100 = $3,372 a year	$33,720 over 10 years, as a City property tax credit

The two are not additive in a single tax return. One reduces your State income tax and the other your City property tax bill. Whether you can use all of an income tax credit depends on your Maryland tax liability, so a tax professional should confirm that. I also make no promise that the same dollars qualify under both programs. Each has its own list of eligible costs.

Why doesn't the federal credit work for an owner-occupied home?

The National Park Service describes the federal historic tax incentive as a credit for rehabilitating income-producing historic buildings. That means rental housing, offices, shops and similar uses. A house you live in does not qualify. If you rent out part of the building, talk to MHT and a tax adviser before you assume the whole building or any part of it qualifies.

For investors the federal credit can matter a great deal. The 20% credit is available for certified rehabilitations of certified historic structures, and a substantial-rehabilitation test applies. The review runs through the Maryland Historical Trust and the National Park Service. That is a separate path from CHAP, with separate forms and timelines.

In what order should you apply?

Check eligibility with each agency. A property can qualify for CHAP and not for MHT, or the other way around.
Apply to CHAP first if you want the City credit, and do not start work. CHAP requires approval before the work begins.
Apply to MHT before construction too. The state credit also requires approval of the work, so ask MHT for its own pre-construction steps.
Use one scope of work that satisfies both reviews, and file amendments with both if the plan changes.
Keep one set of cost records. Both programs want documented, paid costs.

The 25% CHAP threshold is higher than the MHT's $5,000 floor, so CHAP is usually the program that decides how much you have to spend.

Common questions

Can I use the CHAP credit and the Maryland historic credit on the same project?

Generally yes. They are separate programs with separate reviews. Confirm the current rules and approvals with CHAP and the Maryland Historical Trust before you start work.

What is the Maryland homeowner historic credit?

A 20% Maryland income tax credit for qualified rehabilitation costs, with a $5,000 minimum and a $50,000 cap per 24 months, according to the Maryland Historical Trust's homeowner credit page.

Does the federal 20% credit apply to my home?

Not if you live in it. The federal credit is for income-producing historic buildings. Owner-occupied homes are not eligible.

Does CHAP require a minimum spend?

Yes, 25% of the property's pre-rehabilitation full cash value. The MHT homeowner credit has a $5,000 minimum.

Which credit is worth more?

It depends on your costs, your State tax liability and how long you own the house. I would run the numbers for each program with your tax adviser.

Do I need separate approvals?

Yes. CHAP and MHT each review the work on their own standards. Federal review is a third process.

Sources

This article is general information, not legal, tax or financial advice. Program rules change and every project is different. Confirm current requirements with CHAP and the Baltimore City Department of Finance before you start work.