Is the Baltimore CHAP Tax Credit Transferable?

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Direct answer

Yes. The Baltimore CHAP historic tax credit transfers automatically to a new owner for the remaining years of its 10-year term. The buyer does not reapply. The credit continues only while the property keeps its major historic features and stays in compliance with City codes, so buyers should confirm the credit's status before closing.

I am Ed Drost, a Maryland State Certified Residential Appraiser. I have appraised homes in Baltimore City since 1989, including CHAP properties that change hands partway through their credit. Buyers and sellers both ask me the same thing: does the credit go with the house? This is part of our Baltimore appraisal Q&A series. For the full process, see the CHAP Historic Tax Credit Guide.

How does the credit transfer when a house is sold?

The City's rules treat the credit as attached to the property. After a sale, the new owner receives the credit for the years that remain in the 10-year term. There is no new application and no new appraisal just because the title changed.

Two cautions. First, the new owner inherits the conditions along with the benefit: the property must keep its major historic features and comply with City codes, or the credit can end. Second, if the sale happens while the project is still underway, the owner or applicant change has to go to CHAP in writing as a project amendment. The City's rules require amendments for changes in scope, plans, owner or applicant.

What changes depending on when you sell?

Three common sale timings
Sale happens	What transfers	What to check
After final certification, credit running	The remaining years of the credit	Years left, any compliance issues, who receives the tax bill
During construction, after preliminary approval	The project, if CHAP approves the owner change in writing	Project amendment, approved scope, remaining work and deadlines
Before you apply	Nothing. There is no credit yet.	Whether the house is eligible and whether the buyer will apply

Remember the two-year build window. For projects up to $3.5 million, plan to finish within two years of preliminary approval, with one two-year extension available. A buyer who takes over a stalled project inherits the clock.

What is the remaining credit worth to a buyer?

It is worth the City tax you would otherwise pay on the increase in value, for each year that remains. Take a house whose post-improvement value rose $200,000 above its base value. At the City's $2.248 per $100 rate, the credit is about $4,496 a year. The table shows what remains at different points, along with a present-value figure at a 5% discount rate. That discount rate is an illustration, not a market figure.

Illustration: a $4,496-a-year credit (a $200,000 value increase)
Years remaining	Total credit left	Present value at 5%
10	$44,960	$34,717
8	$35,968	$29,059
6	$26,976	$22,820
4	$17,984	$15,943
2	$8,992	$8,360

Appraisers do not add the full dollar total to a sale price. A buyer pays for the reduced carrying cost, and how much that adds to price is a question the market answers. I have not seen a published Baltimore study that sets a dollar-for-dollar rule, so I would be wary of anyone who offers one. What I can say is that lower escrow reduces the monthly payment, and that is real to a buyer.

How does an active credit show up in escrow and in the appraisal?

The credit lowers the City tax bill, and the lender's escrow follows the bill. A lower escrow amount helps a buyer's debt-to-income ratio. When I appraise a CHAP property, I look at what the market pays for the house as it stands, and I note the credit as a feature of the property that the buyer will want to understand. If you are selling, give your agent the City's certification letter and the remaining years up front.

What should buyers and sellers do before closing?

Ask for the CHAP final certification letter and the tax bill showing the credit.
Confirm the years remaining. The term runs 10 tax years from the first bill after final certification.
Find the work history. Ask what was approved and what was done, and whether any amendments were filed.
Walk the house for changes. Removing a major historic feature within the term can end the credit.
Ask CHAP in writing if anything looks unclear. Their answer protects you.

Common questions

Does the new owner have to reapply for the CHAP credit?

No. The credit transfers automatically for the remaining years of the 10-year term, as long as the property keeps its major historic features and complies with City codes.

Can the credit be lost after a sale?

Yes. Removing a major historic feature or changing the property so it no longer meets the City's standards ends the credit, whoever owns the house.

What if I sell before the work is finished?

You must notify CHAP in writing of the owner change through a project amendment. Ask CHAP before you sign a contract that assumes the project continues.

Does the credit raise a home's sale price?

It lowers the buyer's carrying cost. How much that is reflected in price depends on the market, and I know of no published rule that converts remaining credit into a price premium.

How do I find out how many years are left?

Ask the seller for the final certification letter and the tax bills. The 10 years start with the first tax bill after final certification.

Does the credit apply to all my taxes?

No. It covers City property tax only, on the increase in value shown by the pre- and post-improvement appraisals.

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.