If you’re buying a home in Baltimore, you may come across properties that offer a CHAP tax credit. For many buyers, this can be one of the most valuable financial advantages available when purchasing a renovated home in the city.

Understanding how the CHAP tax credit works can help you make a more informed decision and, in some cases, expand what you can comfortably afford.

What Is the CHAP Tax Credit?

The CHAP tax credit stands for the Commission for Historical and Architectural Preservation (CHAP) Historic Restoration and Rehabilitation Tax Credit.

It is a Baltimore City program designed to encourage the renovation of historic properties. When a property is approved and completed under CHAP guidelines, the owner may receive a property tax credit for up to 10 years.

For buyers, this often means purchasing a fully renovated home while benefiting from a reduced city property tax burden compared to the full post-renovation value.

How the CHAP Tax Credit Works

When a home is renovated under CHAP guidelines, two key values are established:

• Pre-renovation value
• Post-renovation (final) value

Instead of paying full Baltimore City property taxes on the higher, post-renovation value, the CHAP credit limits how much of that increase is taxed for a period of time.

The result is a significantly lower tax bill during the credit period, which directly impacts a buyer’s monthly payment.

Real Example: How Much Can You Save?

Let’s look at a real-world style example to understand the impact.

Pre-renovation value: $215,000
Post-renovation value: $565,000

Baltimore City’s tax rate is approximately 2.248%.

Without CHAP (Full Tax on $565,000)

$565,000 × 2.248% = $12,701/year
≈ $1,058/month

With CHAP (Tax Based on $215,000 Value)

$215,000 × 2.248% = $4,833/year
≈ $403/month

Estimated Savings

Annual savings:
$12,701 − $4,833 = $7,868/year

Monthly savings:
≈ $655/month

10-Year savings:
≈ $78,680

⚠️ Important

This is a simple illustration, not a guarantee.

Actual savings can vary based on:

• Final CHAP certification
• Property tax assessments
• Remaining years on the credit
• Additional tax credits or changes in tax rates

Why Buyers Should Pay Attention to CHAP

This is where the opportunity becomes real.

A lower tax bill can:

• Reduce your monthly payment significantly
• Allow you to comfortably afford a higher purchase price
• Make renovated homes more financially accessible
• Improve overall cash flow in the early years of ownership

In many cases, buyers are able to purchase a home that might otherwise feel out of reach based on standard tax calculations.

What to Know Before Buying a CHAP Property

While the benefits are strong, buyers should understand a few key points.

• The tax credit is temporary (up to 10 years)
• The number of remaining years may vary if the home has already been owned
• The credit applies to City property taxes only
• The property must have received final CHAP certification

Understanding these details upfront helps avoid surprises and allows you to plan long term.

Why This Matters in Neighborhoods Like Federal Hill and Canton

CHAP credits are commonly found in neighborhoods with historic housing stock, including:

• Federal Hill
• Riverside
• Canton
• Locust Point

Many renovated rowhomes in these areas are completed with CHAP approval, making this an important factor for buyers to understand when comparing homes.

Final Thoughts

The CHAP tax credit is one of the most valuable incentives available to buyers purchasing renovated homes in Baltimore City.

When used strategically, it can lower your monthly payment, improve affordability, and open the door to homes that may not have been an option otherwise.

If you’re considering buying a home with a CHAP tax credit, taking the time to understand how it works can give you a significant advantage.

Call to Action

If you’re exploring homes in Baltimore City or want to understand how a CHAP tax credit could impact your budget, I’m happy to walk you through real examples and help you evaluate your options.

Eric Figurelle, Realtor
Figurelle Team of Cummings & Co. Realtors
201 Key Hwy
Baltimore, MD 21230
410-952-5099
https://figurelleteam.com