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Why has the CHAP 10 Year Tax Credit become so popular?

December 10, 20130 Comments

Why has the CHAP 10 Year Tax Credit become so popular? Because its expensive to live in Baltimore City and this tax credit makes it much more affordable. A Baltimore City home assessed for $350,000 would have an annual property tax around $7,868. Comparatively a Baltimore County home assessed for $350,000 would have an annual property tax around $3,850.

When buying a home in the city you generally will qualify for a lower sales price because more of your monthly payment goes towards property taxes.  Using the example above the monthly property tax in Baltimore City for a $350,000 house would be $656 a month and in Baltimore County it would be $320 a month. The difference is $336 a month which means your monthly payment for the house in Baltimore County would be $336 less or you could buy a home for $415,000 and have a lower payment then the Baltimore City house at $350,000. Needless to say it’s expensive to live in Baltimore City. The solution: Buy a Baltimore City home with the CHAP 10 Year Tax Credit.

Ron Howard & Associates of RE/MAX Preferred work with a handful of local re-developers that use the CHAP historic tax credit. This tax credit will greatly reduce your annual tax bill across a 10 year period. There are currently new renovations that have the CHAP 10 Year Tax credit on the market in Canton, Fells Point, Federal Hill, Butchers Hill, Highlandtown, Patterson Park & Locust Point. There are many benefits to buying a renovation with the CHAP 10 year tax credit:

  • Much lower monthly mortgage payments.
  • Buying a larger, more expensive home with a lower monthly payment then the less expensive /smaller home with normal taxes.
  • Be the first to live in the new renovation.
  • The CHAP Tax credit is transferable which is a big selling point when you go to sell.

Below is a monthly payment example of a $359,000 home with a CHAP 10 Year tax credit, that was assessed at its pre-renovation tax rate of $100,00 and a $295,000 home without a tax credit. The $359,000 home has a lower monthly payment.

$295,000 home “no tax credit” $359,000 home w/ CHAP 10 Year Tax Credit
Sales price $295,000 Sales price $359,000
Assessed value $295,000 Assessed value (CHAP) $100,000
Annual Taxes (estimate) $7,000 Annual Taxes (estimate) $2,400
Interest Rate 4% Interest Rate 4%
Term 30 Years Term 30 Years
Down Payment 10% Down Payment 10%
Monthly Mortgage Payment  Monthly Mortgage Payment 
Principal & Interest $1,267 Principal & Interest $1,542
Annual taxes of $7,000 $583 Annual taxes of $2,400 $200
Insurance $1,000 $83 Insurance $1,000 $83
Mortgage Insurance $115 Mortgage Insurance $140
Total Mortgage Payment $2,048 Total Mortgage Payment $1,965


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