Leveraging the CHAP Historic Tax Credit to Boost Your Baltimore Home Sale Value

Selling a historic home in Baltimore? If your property qualifies for the CHAP Historic Tax Credit, you have a golden opportunity to increase your home’s sale value and attract more buyers. The CHAP tax credit (short for Commission for Historical and Architectural Preservation tax credit) offers a 10-year property tax incentive on approved renovations to historic homes. Even better for sellers, this historic property tax credit is transferable to the next owner, making it a powerful marketing tool in a Baltimore home sale. In this article, we’ll explain how the CHAP program works, why it’s a home selling advantage, and how to capitalize on it when listing your property.

What is the CHAP Historic Tax Credit?

Baltimore City’s CHAP Historic Tax Credit is a 10-year, 100% property tax credit on the increased assessed value resulting from qualified improvements to a historic property. In simpler terms, if you substantially renovate a historic home under CHAP guidelines, the city waives the property taxes on the value added by those renovations for 10 years. You only pay property tax on the pre-renovation assessment during that decade. For example, if your project boosts your home’s assessed value from $150,000 to $400,000, you pay taxes as if it’s still worth $150,000 – saving thousands per year in city taxes.

To earn this credit, the property must be in a designated historic district (or be a historic landmark), and you must follow CHAP’s renovation standards. Projects need pre-approval from CHAP and must be significant typically you must invest at least 25% of the property’s pre-renovation value in the rehab. Once the work is completed and certified, the credit is applied. The tax bill will show a “Special Credit” line for the CHAP historic credit, reflecting the reduced taxable value. In many cases, homeowners or developers save tens of thousands of dollars over the 10-year span. (One recent CHAP-renovated home was advertised as saving $50,400 in property taxes over 10 years.)

Why CHAP is a Home Selling Advantage

One of the biggest perks of the CHAP program is that the tax credit is transferable to new owners for the remainder of the 10-year term. This means if you sell your historic home during the credit period, the buyer will inherit the remaining years of property tax savings. Unlike some tax incentives that only benefit the original owner, Baltimore’s CHAP credit stays with the property.

This transferability gives Baltimore sellers a huge marketing advantage. You’re not just selling a beautifully renovated historic home – you’re also selling lower future property taxes for the buyer. By advertising the CHAP credit, you signal to buyers that they’ll save money each year on taxes. Lower taxes = lower monthly housing costs for the buyer, which effectively increases their buying power. As the Maryland Historic Tax Credits program notes, passing the CHAP credit to your buyer allows more buyers to qualify for your home and even lets you sell the house for more money, since reducing property taxes means a buyer can afford a higher mortgage payment (and thus a higher sale price) for the same overall monthly cost. In short, the CHAP tax credit in a Baltimore sale is a win-win: buyers get a deal on taxes, and sellers get a compelling selling point that can justify a higher asking price or attract more interest.

CHAP vs. Non-CHAP: How Much More Can a Buyer Afford?

To understand the impact, let’s compare a home with a CHAP credit to one without. Imagine two identical Baltimore homes, both newly valued at $400,000 after renovations – but one has a CHAP historic tax credit (from a $150,000 pre-renovation base value) and the other does not:

In this scenario, the owner of the CHAP-qualified home pays about $5,620 less in city taxes every year. For a buyer, that tax savings could support a significantly larger mortgage – roughly $90,000 more in buying power, according to the CHAP program example. In other words, a $400,000 CHAP home can have a similar monthly payment as a non-CHAP home priced around $310,000, thanks to the dramatically lower tax bill. That’s a huge selling point. A buyer might be willing to pay top dollar for your CHAP-certified property because their ongoing costs will be lower than for a regular home at the same price.

Featuring the CHAP Credit in Your MLS Listing

When selling a CHAP-renovated home, make sure to spotlight the tax credit in your marketing and MLS listing. Many savvy Baltimore listing agents include a highlight about the CHAP credit right in the first lines of the property description. For example, a listing might announce: “Save up to $50,400 on property taxes over 10 years with this fully renovated, CHAP tax credit–approved property!”. Another example: “Freshly painted with 5 years left on the CHAP tax credit – this home has it all!”.

These phrases immediately communicate the value to buyers. Key details to mention are: the total estimated tax savings (or the amount already saved), and/or how many years remain on the CHAP credit. If the credit is newly certified, you can tout the full 10-year term of savings. If it’s partway through (say 5 years left), let buyers know it still offers several years of low taxes. Including the credit’s benefits in your listing can draw in buyers who understand that a lower tax burden keeps their monthly payments down, effectively making your home more affordable than a non-CHAP home at the same price. This is a CHAP home selling advantage you don’t want to overlook in your marketing.

Ensuring a Smooth Transfer of the CHAP Credit to the Buyer

Transferring the CHAP historic tax credit to the new owner is generally straightforward because the credit is tied to the property, not the individual. Once your renovation is final-certified by CHAP and the credit is in place, the Baltimore City Department of Finance applies it to the property’s tax bill automatically (the credit will appear as a line item reducing the tax). To ensure a seamless transfer, take these steps as a seller (and with your listing agent’s help):

• Have Documentation Ready: Keep copies of your CHAP approval letter, final certification, and any documentation of the tax credit amount. Provide these to potential buyers and their agents. It reassures them that the credit is official and spells out the terms (start date, end date, amount saved, etc.).
• Mention CHAP in the Contract: In the sales contract or addendum, note that the property has a CHAP Historic Tax Credit with ___ years remaining. While the credit transfers automatically, putting it in writing ensures all parties (buyers, agents, title company, lenders) are on the same page.
• Consult Official Guidelines: If you or your agent have any doubts, refer to the official Baltimore City CHAP tax credit program resources. The Maryland Historic Tax Credits website provides guidance on the CHAP program and its benefits. You can also contact Baltimore’s CHAP office for any specific questions about the transfer process.

Remember, the new owner will need to continue complying with any maintenance conditions of the credit (for example, not altering the historic features in ways that violate preservation standards during the credit period). Typically, as long as the property remains in good standing, the buyer will enjoy the remaining credit without any re-application. By handling the paperwork and communication upfront, you give the buyer confidence that they’ll receive the tax break, which only strengthens your negotiating position.

Maximize Your Sale Value with the CHAP Tax Credit Advantage

In summary, the CHAP tax credit gives Baltimore sellers of historic homes a unique edge. It’s not often you can offer a house that comes with a built-in reduction in annual expenses for the buyer. This historic property tax credit essentially puts money back in a buyer’s pocket every year – which can translate into a higher selling price for you or a faster sale in a competitive market. If you’ve invested in a CHAP-qualified renovation, make sure you leverage this advantage fully when selling.

Ready to capitalize on your CHAP home selling advantage? Don’t leave money on the table. Whether you’re a homeowner or a developer who utilized the CHAP program, we have the expertise to showcase this benefit and capture the full market value of your property. Contact our team for expert guidance on marketing your CHAP-certified historic home. We’ll help you highlight the tax savings to buyers, navigate the transfer of the credit, and negotiate the best possible sale. With the right strategy, your CHAP tax credit in Baltimore can be the catalyst for a top-dollar, swift sale – turning your preservation effort into a profitable success story.