Build Maryland Tax Credit Act – Senate Bill 138

New Maryland legislation has been proposed that would give commercial property developers a state income tax credit of up to $25,000 for commercial real estate investment expenses. There are many unanswered questions regarding this proposed new tax credit and it is uncertain this law will ever make it through the legislature in its current form. Additionally, the details of the new law will not be known until after enactment when the Comptroller issues regulations.  However, based on the language in the proposed legislation, here is what we know:

Effective July 1, 2013, commercial real estate developers can apply for a Maryland income tax credit of up to $25,000. The credit will reduce the developer’s Maryland income tax and is refundable if the credit exceeds the tax. The Maryland Department of Business and Economic Development would issue a credit certificate to each individual or corporation that has qualified commercial real estate investment expenses in a priority funding zone. The credit is the lesser of 25% of the first five years of federal depreciation expense associated with the commercial real estate investment expenses or $25,000.  The credit certificates would be issued on a first-come, first-served basis.

Currently the public hearing on this legislation is scheduled for February 6, 2013 at 1:00 in the Senate’s Budget and Taxation Committee. We will keep you up to date on the progress of this legislation during the current Maryland General Assembly session.

To determine if your property is in the priority funding zone, enter the address at the following website:

http://www.mdp.state.md.us/OurWork/PFAIMap.shtml

For more information or specific questions, please contact a KatzAbosch tax advisor at 410-828-CPAS (2727) or email magetstein@katzabosch.com.

Submitted by Andrew L. Bareham, CPA & Michael J. Agetstein, PFS, CPA

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