The most recent expose in The Baltimore Sun’s series about taxes admonishes the city for tax-break errors that have lost millions of dollars in potential revenue. Here’s what’s going on:
Baltimore is full of historic architecture – there are 55,000 properties, almost one in four buildings in the city that qualify as part of a historic district or landmark. The city has a number of programs in place to make sure these spaces are properly preserved, one of which offers tax breaks for owners of historic properties. Basically it guarantees these owners a decade of tax breaks for restorations and rehabs. If, say, your restorations raise a building’s value from $150,000 to $225,000 the city will keep taxing you only $150,000 for the next 10 years.
Theses preservation programs themselves aren’t the problem. They make sense, because they encourage investment in and renovation of properties that otherwise might be destroyed – just think of all the trendy former-warehouse lofts you see on sale for $700,000 or $800,000.
But whoever has been calculating the tax breaks has really messed up. Errors left and right abound: Many people have been receiving tax breaks for longer than 10 years, or more of a tax break than they were entitled to. And the breaks have allowed some owners to dodge taxes on market gains that have nothing to do with rehabilitation. These “clerical errors” have cost the city more than 2 million bucks in lost taxes since 2009. That’s money we just can’t afford to lose.