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The CHAP credit equals the City property tax on your post-improvement value minus the City tax on your pre-improvement base value, applied for 10 tax years. At Baltimore's $2.248 per $100 rate, a $200,000 increase in value produces about $4,496 a year, or $44,960 over 10 years. Your own figure depends on the two appraisals.
I am Ed Drost, a Maryland State Certified Residential Appraiser. Owners usually ask me one thing about CHAP before they ask about anything else: what will it save me? The answer depends on two appraisals I write, so I can show you how the math works and where the estimate can be wrong. This is part of our Baltimore appraisal Q&A series. For the full process, see the CHAP Historic Tax Credit Guide.
What is the CHAP credit formula?
Three steps. Take the post-improvement value from the second appraisal and subtract the pre-improvement base value from the first. Multiply that increase by the City real property tax rate. The result is the credit for each year.
Annual credit = (post-improvement value − pre-improvement value) × City tax rate ÷ 100.
The City computes the amount once and applies it for 10 tax years. The credit starts with the first tax bill after final certification. For projects with construction costs up to $5.0 million you receive 100% of it each year.
What does a $200,000 increase actually save?
Say a rowhouse appraises at $150,000 before the work and $350,000 after. The increase is $200,000. At $2.248 per $100, the City tax on that increase is $200,000 × 0.02248, or $4,496 a year, about $374.67 a month, and $44,960 over 10 years.
| Increase in value | Credit per year | Per month | Over 10 years |
|---|---|---|---|
| $50,000 | $1,124 | $94 | $11,240 |
| $100,000 | $2,248 | $187 | $22,480 |
| $150,000 | $3,372 | $281 | $33,720 |
| $200,000 | $4,496 | $375 | $44,960 |
| $300,000 | $6,744 | $562 | $67,440 |
These are estimates, not promises. The City's calculation uses the final appraisals, and the rate can change from year to year. Use the table to compare options, not to underwrite a loan.
Which tax rate should you use?
The City's nominal real property rate is $2.248 per $100 of assessed value, and I use it above because the credit is a City tax credit. Be aware that owner-occupants of a home may see a lower effective rate. The Baltimore Banner reported on June 18, 2026 that the owner-occupant rate is $2.03 per $100, falling to $1.99 by mid-2027. Check the Department of Finance's real property tax page for the rate on your bill. If your bill uses the lower rate, your credit on the same increase will be smaller than the table above. Look at your own City tax bill and ask CHAP which rate applies to your property.
What can reduce the credit below the estimate?
- The credit cannot reduce your tax below the base. The regulations stop the credit from taking your City tax below the liability set at preliminary approval.
- Appraisals, not assessments. Your credit is based on the two appraisals the City accepts, not on what you think the house is worth.
- Costs over $5.0 million. Above that level the percentage drops: 80% in years 1 through 5, then 70% down to 30% over years 6 through 10.
- Compliance. Removing a major historic feature or breaking the City's conditions can end the credit early.
- Only the City line. The credit does not touch State or other tax lines on your bill.
How does the credit change your monthly payment?
If your lender escrows property taxes, a lower City tax bill means a lower escrow deposit. The $4,496 example is about $374.67 a month. Escrow analysis happens periodically, so your lender may adjust the payment on its schedule rather than on the day the credit begins. Call your servicer when the credit appears on your bill.
Common questions
What is the formula for the CHAP tax credit?
The credit equals the City tax on the post-improvement value minus the City tax on the pre-improvement value, applied for 10 tax years. In plain terms, the increase in value times the City tax rate.
How much does a $200,000 increase save?
At the City's $2.248 per $100 rate, about $4,496 a year, $374.67 a month, and $44,960 over 10 years. Your own rate and appraisals will change that.
Does the credit pay the whole property tax bill?
No. It offsets City tax on the increase in value. You still pay City tax on the base value and any other tax lines.
Does the credit change if the property is reassessed?
As I read the City's rules, the credit is computed once from the appraisals and applied for 10 years. Confirm with the Department of Finance how it interacts with your reassessment.
What if my costs are over $5.0 million?
You receive 80% of the credit for years 1 through 5, then 70% down to 30% over years 6 through 10.
When does the credit start?
With the first tax bill after final certification, and it runs for 10 tax years.
Sources
- Baltimore City Historic Tax Credit, CHAP
- Historic Tax Credit FAQ, CHAP
- Historic Tax Credit Rules and Regulations, Baltimore City Department of Finance (effective December 14, 2020)
- Real Property Taxes, Baltimore City Department of Finance
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.
More articles
How Is the Appraisal Calculated for the Baltimore CHAP Tax Credit?
How the two CHAP appraisals set your credit: what each must show, the 90-day clocks, and why the post-renovation value is not a projection.
Does the Baltimore CHAP Tax Credit Transfer to a New Buyer?
The credit follows the house, not the owner. What a buyer inherits, what a seller should hand over, and what can end the credit after a sale.
What Steps Are Required to Apply for the Baltimore CHAP Tax Credit?
The CHAP application in order, from eligibility to final certification, and the five mistakes that cost owners their credit.