New Maryland State Income Tax Credit for Small Commercial Projects by Mark Pollak

The owners of small commercial properties in Maryland historic districts should take note of the Maryland Sustainable Communities Small Commercial Tax Credit, a new state income tax credit that may be available to them as of January 1, 2015. This new program—administered by the Maryland Historical Trust (MHT) and similar to programs previously available to larger commercial projects and homeowners— targets commercial projects with between $5,000 and $500,000 in qualifying expenditures.

Qualifying small commercial projects could earn a state income tax credit equal to 20 percent of qualified rehabilitation expenditures (capped at $50,000 in a 24-month period). The tax credit is available on a “first-come, first-served” basis to any project that meets the credit requirements until a total of $4 million in credits is awarded statewide.

Eligibility Requirements

To be eligible for the tax credit, a building must:

  • Be located within a Maryland Sustainable Community
  • Be used primarily as an income-producing property and have not more than 75 percent residential rental use (measured after the rehabilitation is completed)
  • Have total qualifying rehabilitation expenditures not exceeding $500,000
  • Be a certified historic structure, meaning that a building must be one of the following:
  • Listed individually in the National Register of Historic Places or be a structure that contributes to the significance of a National Register Historic District
  • A locally designated structure or a structure that contributes to the significance of a local historic district that the MHT designates as eligible for the National Register
  • Located within and certified as contributing to the significance of a certified heritage area