COM/RAD 031
MARYLAND
FORM
502S
2019
HERITAGE STRUCTURE
REHABILITATION TAX
CREDIT INSTRUCTIONS
General Instructions
Corporations and pass-through entities must le electronically
to claim or pass on a Heritage Structure Rehabilitation Tax
Credit. See Instructions to Form 500CR, Part DDD.
Purpose of Form
Form 502S is used to calculate allowable tax credits for the
rehabilitation of certied historic structures located in Maryland
and completed in the tax year which begins January 1, 2018
through December 31, 2018.
Certied Expenditures
To claim the credit, the certied rehabilitation must be certied
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.
Allowable Credit
A credit for a percentage of the amount spent to rehabilitate a
certied 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
certicate.
An additional credit may be claimed for a commercial
rehabilitation of a certied 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 qualied rehabilitation
expenditures do not exceed $500,000. Small commercial
project does not include a structure that is used solely for
residential purposes.
Specic 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 Certication Application
(Part 3).
Line 2 –Enter on line 2 the amount of certied expenditures
for the property from the Certication 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 certied 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.
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 led: 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.
Special Instructions for Multiple Properties
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 certication 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.
Recaptures
For Commercial Rehabilitations. If within the rst 5 years
(starting with the rst year the credit was claimed), work was
performed that would disqualify a certication or the certied
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 certied rehabilitation is done.
For Other Rehabilitations. If within the rst 5 years (starting
with the rst year the credit was claimed), work was performed
that would disqualify a certied 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 rst 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 fth year, 20% of the credit must be recaptured.
No recapture is required for disqualifying work performed after
the rst 5 years or disposal after the rst 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 Certication Application (Part 3) to Form 502CR,
Form 504, or Form 500CR. Failure to do so will result in the
credit being disallowed.
Note: Nonprot organizations that have been certied as
having a qualied rehabilitation, may claim this credit on Form
502S. Trusts should attach Form 502S to Fiduciary Form 504.
501(c)(3) corporations should complete the Form 502S section
on their electronically-led corporation income tax return.
For questions concerning certication, 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
Web site at www.marylandtaxes.gov or email your question
to TAXHELP@comp.state.md.us. You may also call 1-800-638-
2937 or from Central Maryland 410-260-7980.
