Fillable Maryland Form 502s - Sustainable Communities Tax Credit

2014

SUSTAINABLE COMMUNITIES

MARYLAND

FORM

TAX CREDIT INSTRUCTIONS

502S

General Instructions

Line 6 – Enter line 5 less the amount of any recaptures (See

Corporations and pass-through entities must file electronically

below.). If negative, enter the negative amount.

to claim or pass on a Sustainable Communities Tax Credit. See

Instructions to Form 500CR, Part Z.

Also, enter this amount on the appropriate line of the

income tax form being filed: line 2, Part I of Form

Purpose of Form

502CR (Forms 502 or 505); line 34 of Form 504; or

Form 502S is used to calculate allowable tax credits for the

line 1, Part Z of Form 500CR (Corporation and PTE

rehabilitation of certified historic structures located in Maryland

returns). If there is more than one property for which

and completed in the tax year which begins January 1, 2014

a credit is being claimed, see Special Instructions for

through December 31, 2014.

Multiple Properties.

Certified Expenditures

Special Instructions for Multiple Properties

To claim the credit, the certified rehabilitation must be certified

If you are claiming a credit for multiple properties, complete

by the Maryland Historical Trust (MHT) as a substantial

lines 1-5 on a separate Form 502S for each property that is

rehabilitation. “Substantial rehabilitation” means expenditures

being claimed. Also, attach the required certification for each

exceeding $5,000 for single-family, owner-occupied residential

property that is being claimed. Total the amounts for line 5 of

property or a small commercial project. For all other property,

all the properties. On line 6, enter this total amount less the

“substantial rehabilitation” means the greater of the adjusted

total recapture amounts for all properties. If negative, enter

basis of the structure or $25,000. The same expenditures may

the negative amount.

not be used to qualify for a credit in any other tax year.

Recaptures

Allowable Credit

For Commercial Rehabilitations. If within the first 5 years

A credit for a percentage of the amount spent to rehabilitate a

(starting with the first year the credit was claimed), work was

certified historic structure is provided on the form. Credit for

performed that would disqualify a certification or the certified

rehabilitation may be refunded if the credit exceeds the State

rehabilitation is disposed of, a portion of the credit is subject

tax liability. A credit may not exceed $3,000,000 for commercial

to recapture. A recapture must be made on the tax return for

rehabilitations or $50,000 for all other rehabilitations including

the tax year in which the disqualifying work or the disposal of

small commercial projects.

Subject to MHT approval for

a certified rehabilitation is done.

postponement, commercial rehabilitation must be completed

For Other Rehabilitations. If within the first 5 years (starting

within 30 months from the date of issuance of the initial

with the first year the credit was claimed), work was performed

certificate.

that would disqualify a certified rehabilitation for which a credit

An additional credit may be claimed for a commercial

was claimed, a portion of the credit must be recaptured.

rehabilitation of a certified historic structure that is a high

Calculation of the Recapture. The recapture is calculated

performance building. Small commercial projects do not

as follows:

qualify for this credit. “Small commercial project” means a

rehabilitation of a structure primarily used for commercial,

• In the first year, 100% of the credit must be recaptured.

income producing purposes, if the qualified rehabilitation

• In the second year, 80% of the credit must be recaptured.

expenditures do not exceed $500,000 and the structure is

• In the third year, 60% of the credit must be recaptured.

located in a sustainable community. Small commercial project

does not include a structure that is used solely for residential

• In the fourth year, 40% of the credit must be recaptured.

purposes.

• In the fifth year, 20% of the credit must be recaptured.

Specific Instructions

No recapture is required for disqualifying work performed after

Note: If credit is being claimed for multiple properties, see

the first 5 years or disposal after the first 5 years. Line 5 must

Special Instructions for Multiple Properties.

be reduced by the amount of the recapture and entered on

line 6.

Line 1 – Enter the MHT project number and location of the

property as shown on the Certification Application

Attachment of Forms

(Part 3).

Attach your completed Form 502S along with a copy of the

Line 2 – Enter on line 2 the amount of certified expenditures

approved Certification Application (Part 3) to Form 502CR,

for the property from the Certification Application

Form 504, or Form 500CR. Failure to do so will result in the

(Part 3).

credit being disallowed.

Line 3 – Multiply the expenditure on line 2 by 20% and enter

Note: Non-profit organizations that have been certified as

the result.

having a qualified rehabilitation, may claim this credit on Form

502S. Trusts should attach Form 502S to Fiduciary Form 504.

Line 4 – If

the

expenditures

are

for

the

commercial

501(c)(3) corporations should complete the Form 502S section

rehabilitation of a certified structure that is a high

on their electronically-filed corporation income tax return.

performance building, multiply the expenditure on

line 2 by 5% and enter the result. Otherwise, enter 0.

For questions concerning certification, contact:

(See Allowable Credit.).

Maryland Historical Trust

Line 5 – Add lines 3 and 4. Enter the lesser of that total or the

100 Community Place

applicable maximum credit. The applicable maximum

Crownsville, Maryland 21032-2023

credit for a single-family, owner-occupied residence or

410-514-7628

small commercial project is $50,000. The applicable

maximum credit for a commercial rehabilitation is

For questions concerning the credit calculation, visit our

$3,000,000.

Web site at 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.

COM/RAD 031

Maryland Form 502s - Sustainable Communities Tax Credit - 2014 Page 2

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