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CHAP 10 Year Tax Credit Example

Baltimore City has the highest property taxes in the state of Maryland.

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 property taxes are expensive in Baltimore City. The solution: Buy a home with the CHAP 10 Year Tax Credit.

Here is a basic overview of how the credit is calculated and how it works. The tax credit is not calculated until the property is reassessed, and the calculation is handled by the City’s Department of Finance. The tax credit is a dollar value that is subtracted from an owner’s property tax bill each year for 10 years. The tax credit offsets any increase in Baltimore City’s taxes that occurs following a substantial rehabilitation project. For Example: if your property taxes were $2,000/year before the property was rehabilitated and, once the project is complete, the new assessment increases the taxes to $8,000/year, your tax credit would be $6,000/year. That $6,000 is subtracted each year for ten years from your taxes. The tax credit appears as a “Special Credit” on the tax bill, so if the credit is already active you can see the value on last year’s tax bill. Baltimore City held a meeting on September 15th, 2014 to discuss using appraisals to formulate the tax credit moving forward, when we have more information we will update this site.

Ron Howard & Associates of RE/MAX Preferred works 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 then a home with fully assessed taxes.
  • Qualify and buy a home with a higher sales price ($40,000 to $80,000 more) with the same payment.
  • Use the money your saving monthly to pay towards your principal and pay off your loan years ahead of schedule.
  • Buy sooner because you need less cash to close (lower tax escrow).
  • With lower tax escrow to close you will have more cash on hand to put down and potentially switch to better financing.
  • Be the first to live in the new renovation.
  • The CHAP Tax credit is transferable, a big selling point when you go to sell.
  • You don’t lose the Credit if you decide to use the property as  a rental property.

Below is a monthly payment example of a $359,000 home with a CHAP 10 Year tax credit based on improvements of $259,000 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  $359,000
Annual Taxes (estimate) $7,000 Annual Taxes (estimate) minus CHAP Credit on improvements of $259,000 $8,745 Tax minus $6,345 CHAP Credit equals: $2,400 due Annually
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

Every properties scenario will be different, this is just an example.

Links for more information

Baltimore City – Historical & Architectual Preservation / Tax Incentive

Baltimore City – About CHAP

Baltimore City – Commission for Historical & Architectual Preservation



Ron Howard & Associates of RE/MAX Preferred – 443-573-9222.

Email Ron at

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