Now that 2019 has come to a close, it is time for tax-paying property owners of designated historic properties in the city of Frederick to gather their receipts and invoices for all exterior preservation and rehabilitation work completed in the prior year in order to apply for the city’s historic preservation property tax credit.
Eligible properties include all those in the historic preservation overlay zone, which includes the Frederick Town Historic District as well as individually designated landmarks. The deadline for tax credit applications is April 1, and any credits will be applied to property tax bills mailed by the county in July.
The city’s historic preservation property tax credit is intended to offset some of the added costs that may arise from maintaining a designated historic property in accordance with the adopted design guidelines. The credit is equal to 25 percent of the properly documented expenditures incurred for exterior work that contributes to the restoration or preservation of a designated structure.
This includes, but is not limited to, work such as repointing; repairing windows and doors; exterior painting; replicating deteriorated or missing historic trim or ornament; roof repairs or replacement with historically appropriate or traditional materials; and the installation or storm doors and windows. Examples of ineligible items include interior work; new construction or an addition; mechanical equipment, electrical or plumbing systems, utilities, plantings or tree removal, professional services, and permit fees. Payments made to licensed contractors are eligible, but the value of the property owner’s time is not.
Not all work that requires and receives Historic Preservation Commission (HPC) approval is necessarily eligible for the tax credit. For example, HPC approval is required for a new patio or parking area, but because this work does not contribute to the exterior restoration of a historic structure, the related expenses are not eligible.
One important requirement to keep in mind is that the project must have prior HPC approval and a building or zoning permit unless the project is only for eligible work on the Minor Rehabilitation List. Retroactive HPC applications will not be considered for tax credit eligibility purposes at the time of a property tax credit application. Additionally, minimum eligible expenditures must total at least $500 and the maximum total credit for any given year is capped at $7,500. However, if the amount of the credit exceeds the tax liability, the amount can be carried over for up to five years and is transferable if the property is sold before the credit is fully claimed. The city may recapture the credit if the structure is subsequently demolished.
In 2019, 31 property owners received a historic preservation property tax credits, the total amount of which was over $65,000 or an average of around $2,100 per property owner. The application process is simple and there is no fee. Before and after photographs are required along with proof of payment, receipts or invoices marked paid and other documentation as outlined on the application forms which can be found online at www.cityoffrederickmd.gov/preservation or in the Planning Department, 140 W. Patrick St.
Planning staff will complete an initial review of tax credit applications and verify that all required documentation is submitted. Applicants may contact staff to set up a time to review their materials in person. The HPC will certify the expenditures based on staff’s recommendation and transmit them to the director of finance for the final review who will in turn notify the Frederick County Treasury of the credit amounts to apply to property tax bills.
If you are the owner of a property designated in the historic Preservation Overlay in the city of Frederick, don’t delay in getting your property tax credit application in and don’t hesitate to call the Planning Department with any questions at 301-600-1499.