City's tax incentives aim for affordable housing

REAL ESTATE MAILBAG

April 30, 1995|By Michael Gisriel

Q: Can you briefly describe some of the tax-incentive programs that the city has recently passed?

Jeff Daniels, Baltimore

A: The following tax-relief programs are now available:

* Newly Constructed Housing Tax Credit, to stimulate new residential construction in Baltimore City.

How it works: A newly built home in Baltimore City sells for $120,000 and is assessed at $48,000. Yearly property taxes would normally be $2,800.

But the tax credit under this program cuts the tax bill in half -- to $1,400 -- for the first year, and it would continue a tax reduction for 5 years. The net savings to the homeowner for this house under the program would total $4,200 over five years.

* Rehabilitated Vacant House Tax Credit, to increase renovation of the city's large stock of vacant houses.

How it works: A vacant house is purchased for $10,000, is assessed at $4,000, and carries yearly property taxes of $234. After renovation, the home is worth $40,000 and assessed at $16,000. The increased assessed value of the renovated house would ordinarily mean $702 in new property taxes per year. Under this tax credit program, the increase would be eliminated in the first year and phased in over five years, for a total savings of $2,100.

* Home Improvement Tax Credit Program, to protect homeowners from sudden property tax increases due to home improvements.

How it works: A homeowner adds a garage or bedroom to his city home. The home that was formerly worth $80,000 is now worth $100,000. The assessment on the home would increase from $32,000 to $40,000, and property taxes would rise $500 yearly.

The home improvement tax credit program would cut the increased taxes in half the first year and would reduce the tax bill for a total of five years. Total savings for this example would be $750.

*

For more information, as well as applications, on these and other Baltimore City tax credit programs, call (410) 396-3971 or (410) 396-3979.

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