"Residents are taking the tax credit and channeling it into a tool that helps preserve historic properties and pumps money back into the economy," she said in an interview. "It's not like they're taking the money and going on vacation to Italy with it."
In addition to the Maryland state credit, several counties and local jurisdiction offer their own credits. For example, Montgomery County credits 10 percent of the amount spent against property taxes paid. Exterior maintenance is covered, but new construction and interior work are not. The Prince George's County credit is also 10 percent and covers many interior and exterior improvements.
Paul Ferguson, and his wife, Karen Keyes, shown with sons Timothy, 5, and Daniel, 2, used Virginia's 25 percent tax credit to expand their Arlington home -- on the state's landmarks register -- to fit a growing family.
(Hyosub Shin For The Washington Post)
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Credits and Contacts
Here is a summary of local historic preservation tax credits:
Maryland
• Amount of credit: 20 percent
• Limitations: Owners must spend at least $5,000 over a 24-month period. The maximum credit allowed is $3 million. The law is set to expire on June 1, unless the Maryland General Assembly extends it.
• Receiving the credit: The state issues a check for the amount of the credit beyond a year's tax bill.
• Contact: Maryland Historic Trust, 410-514-7639; www.marylandhistorictrust.net/taxcr.html
Virginia
• Amount of credit: 25 percent
• Limitations: Owners must spend at least 25 percent of the value of the structure itself. Expenses for additions or enlargements are not eligible.
• Receiving the credit: Property owners can carry over the unused amount of the credit for 10 years or until it is used up.
• Contact: Department of Historic Resources, Winchester office (which serves Northern Virginia), 540-722-3428; www.dhr.state.va.us.
District of Columbia
• Amount of credit: Varies from 15 to 35 percent
• Limitations: The credit is not currently funded. If the program were funded, recipients could live only in certain designated historic neighborhoods and would have to make 120 percent or less of the median income. There would be a $25,000 cap per project.
• Contact: Office of Historic Preservation, 202-442-8818
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Virginia
Virginia's program also began in 1997. That year, there were 86 projects submitted for approval; last year, there were 269.
"The federal credit was so popular and successful in eliciting economic growth and preservation that the state assembly saw the wisdom and began offering a state credit," said Virginia McConnell, manager of the office of preservation initiatives in the Virginia Department of Historic Resources. "We see no disadvantages to the credit at all."
Unlike Maryland, the Virginia credit began at 10 percent and was phased in to the current 25 percent level; there is no provision in the law to phase it out or lower the credit. Property owners must invest at least 25 percent of the value of the house itself in the project. That means if the total value of the property on a tax bill is $300,000, and the worth of the structure is $100,000, at least $25,000 must be spent on the remodeling project.
Like its neighbor across the Potomac, the Virginia credit requires property owners to undergo a three-step application process.
First, they must submit an application that shows the property is certified by the state or federal government as historic and describes the property. Next, the property owners must submit a description of the proposed rehabilitation.
"Ideally, this is submitted before work gets underway so we can make sure the work will meet our requirements," McConnell said. However, those applying for the credit do not have to turn in their application before work commences.
In the final step, property owners must send proof that the work has been completed, including photos of the finished work.
An added bonus is that communities are working to get historic districts listed, McConnell said.
The greatest number of applicants for the credit come from Arlington County, McConnell said. That doesn't surprise Michael Leventhal, Arlington's historic preservation coordinator. In the last year, 70 people applied for the credit, from such older neighborhoods as Ashton Heights, Lyon Park and Lyon Village. Complexes such as Colonial Village and Fairlington have also added to the rise in applications.
"Most people call me up with questions if they can do this or that to their historic properties. I tell them they can get a tax credit, and they say, 'Whoa, I had no idea,' " Leventhal said.
District
The District's program, which is not operating due to lack of funding, is supposed to target poorer historic neighborhoods such as Anacostia, LeDroit Park and Shaw.
If the program were functional, applicants could make up to 120 percent of the median income, about $85,000, according to Lisa Burcham, D.C. preservation director. "The point being, it isn't meant for the Cleveland Parks and Dupont Circles. It's meant for rehabilitation of blighted property," she said.
The law caps the credit at $25,000 per project, and provides a 15 to 35 percent tax credit depending on the location of the property and income level.
"It's a terrific initiative, a terrific tool to spur the renovation of more blighted areas, but the reality is that the city has a fiscal responsibility to find an offset in the budget" to make up for the lost revenue from the tax credit, Burcham said.
Lally, of the National Trust for Historic Preservation, said he hopes District officials can find a way to fund the initiative.
"The ability to keep people in the community, the middle class, the working class, the people dealing with stability issues, is an essential benefit of the tax credits," he said. "It keeps them in historic houses with some incentive stay there."
