Maryland Maryland Sustainable Communities Tax Credit

Maryland Sustainable Communities Tax Credit
2023 502S Maryland Heritage structure rehabilitation Tax Credit
MARYLAND
FORM

502S

2023

HERITAGE STRUCTURE
REHABILITATION TAX
CREDIT

Print using blue or black ink only.

Name of taxpayer(s)		

Taxpayer Identification Number

	 Check here if this credit is derived from an entity other than that shown above.
	Enter the entity’s Federal Employer Identification Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
•	 YOUR MARYLAND RESTORATION AND QUALIFIED COSTS MUST BE CERTIFIED BY THE MARYLAND HISTORICAL
TRUST (MHT). Attach a copy of your approved Certification Application (Part 3) and Form 502S to your tax return.
• REMINDER: Do not send photographs to the Revenue Administration Division. All photographs are to be sent to the MHT at:
100 Community Place, 3rd Floor, Crownsville, Maryland 21032-2023.
For more information or to obtain applications, contact the MHT at 410-697-9535 or mht.maryland.gov
Check here if a credit is being claimed for more than one property. See Special Instructions for Multiple Properties.
1. Enter MHT Project Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
Location of Property

Street Address

City or Town	

State	

ZIP Code+4

2. Certified rehabilitation expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

00

3. Credit for certified rehabilitation expenditures (Multiply line 2 by 20% (.20) and enter on line 3.).. . . . 3.

00

4. Additional credit for certified rehabilitation of a high performance building. (If applicable,
multiply line 2 by 5% (.05) and enter on line 4. Otherwise, enter 0.). . . . . . . . . . . . . . . . . . . . . . . . . 4.

00

5. Total credit amount (Add lines 3 and 4. For commercial rehabilitations, enter the lesser of the total
or $3,000,000. For all other rehabilitations, enter the lesser of the total or $50,000.). . . . . . . . . . . . . 5.

00

6. Total credit amount less recaptures (Enter line 5 less any recaptures if applicable.
If less than 0, enter negative amount. See Instructions.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

00

If you are filing Form 502 or Form 505, enter the amount from line 6 on line 2, Part CC of Form 502CR.
If you are filing Form 504, add the amount from line 6 on line 30 of Form 504.
Corporations and PTEs will claim this credit on line 1, Part DDD of Form 500CR.
If negative, enter the negative amount on the appropriate form.

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6.

MARYLAND
FORM

502S

2023

HERITAGE STRUCTURE
REHABILITATION TAX
CREDIT INSTRUCTIONS

General Instructions

Form 502S is used to calculate allowable tax credits for the
rehabilitation of certified historic structures located in Maryland
and completed in the tax year which begins January 1, 2023
through December 31, 2023.

Line 6	 Enter line 5 less the amount of any recaptures (See
below). If negative, enter the negative amount. Also,
enter this amount on the appropriate line of the
income tax form being filed: line 2, Part CC of Form
502CR (Forms 502 or 505); line 30 of Form 504; or
line 1, Part DDD of Form 500CR (Corporation and PTE
returns). If there is more than one property for which
a credit is being claimed, see Special Instructions for
Multiple Properties.

Certified Expenditures

Special Instructions for Multiple Properties

To claim the credit, the certified rehabilitation must be certified
by the Maryland Historical Trust (MHT) as a substantial
rehabilitation. “Substantial rehabilitation” means expenditures
exceeding $5,000 for single-family, owner-occupied residential
property, including a small commercial project. For all other
property, “substantial rehabilitation” means the greater of
the adjusted basis of the structure or $25,000. The same
expenditures may not be used to qualify for a credit in any
other tax year.

If you are claiming a credit for multiple properties, complete
lines 1-5 on a separate Form 502S for each property that is
being claimed. Also, attach the required certification for each
property that is being claimed. Total the amounts for line 5 of
all the properties. On line 6, enter this total amount less the
total recapture amounts for all properties. If negative, enter
the negative amount.

Corporations and pass-through entities must file electronically
to claim or pass on a Heritage Structure Rehabilitation Tax
Credit. See Form 500CR Instructions, Part DDD.
Purpose of Form

Allowable Credit
A credit for a percentage of the amount spent to rehabilitate a
certified historic structure is provided on the form. Credit for
rehabilitation may be refunded if the credit exceeds the State
tax liability. A credit may not exceed $3,000,000 for commercial
rehabilitations or $50,000 for all other rehabilitations including
small commercial projects. Subject to MHT approval for
postponement, commercial rehabilitation must be completed
within 30 months from the date of issuance of the initial
certificate.
An additional credit may be claimed for a commercial
rehabilitation of a certified historic structure that is a high
performance building. Small commercial projects do not
qualify for this credit. “Small commercial project” means a
rehabilitation of a structure primarily used for commercial,
income producing purposes, if the qualified rehabilitation
expenditures do not exceed $500,000. Small commercial
project does not include a structure that is used solely for
residential purposes.
Specific Instructions
Note: If credit is being claimed for multiple properties, see
Special Instructions for Multiple Properties.
Line 1	 Enter the MHT project number and location of the
property as shown on the Certification Application
(Part 3).
Line 2 	 Enter on line 2 the amount of certified expenditures
for the property from the Certification Application
(Part 3).
Line 3	 Multiply the expenditure on line 2 by 20% and enter
the result.
Line 4	 If the expenditures are for the commercial
rehabilitation of a certified structure that is a high
performance building, multiply the expenditure on
line 2 by 5% and enter the result. Otherwise, enter 0.
(See Allowable Credit).
Line 5	 Add lines 3 and 4. Enter the lesser of that total or the
applicable maximum credit. The applicable maximum
credit for a single-family, owner-occupied residence or
small commercial project is $50,000. The applicable
maximum credit for a commercial rehabilitation is
$3,000,000.

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Recaptures
For Commercial Rehabilitations. If within the first 5 years
(starting with the first year the credit was claimed), work was
performed that would disqualify a certification or the certified
rehabilitation is disposed of, a portion of the credit is subject
to recapture. A recapture must be made on the tax return for
the tax year in which the disqualifying work or the disposal of
a certified rehabilitation is done.
For Other Rehabilitations. If within the first 5 years (starting
with the first year the credit was claimed), work was performed
that would disqualify a certified rehabilitation for which a credit
was claimed, a portion of the credit must be recaptured.
Calculation of the Recapture. The recapture is calculated
as follows:
• In the first year, 100% of the credit must be recaptured.
• In the second year, 80% of the credit must be recaptured.
• In the third year, 60% of the credit must be recaptured.
• In the fourth year, 40% of the credit must be recaptured.
• In the fifth year, 20% of the credit must be recaptured.
No recapture is required for disqualifying work performed after
the first 5 years or disposal after the first 5 years. Line 5 must
be reduced by the amount of the recapture and entered on
line 6.
Attachment of Forms
Attach your completed Form 502S along with a copy of the
approved Certification Application (Part 3) to Form 502CR,
Form 504, or Form 500CR. Failure to do so will result in the
credit being disallowed.
Note: Nonprofit organizations that have been certified as
having a qualified rehabilitation, may claim this credit on Form
502S. Trusts should attach Form 502S to Form 504. 501(c)(3)
corporations should complete the Form 502S section on their
electronically-filed corporation income tax return.
For questions concerning certification, contact:
Maryland Historical Trust
100 Community Place, 3rd Floor
Crownsville, MD 21032-2023
410-697-9535
mht.maryland.gov
For questions concerning the credit calculation, visit our
website at marylandtaxes.gov or email your question to
[email protected]. You may also call 1-800-6382937 or from Central Maryland 410-260-7980.