Maryland extends nonprofit housing tax exemptions and debt collection protections

Eligible housing owned through nonprofit subsidiaries receives exemptions from state and local property taxes and special assessments, charges for public improvements. This covers housing for people who meet income limits, including property owned partly or indirectly through subsidiaries. These exemptions do not apply to Baltimore City property. They also exclude projects owned by a nonprofit or an entity it controls or wholly owns if the project received development aid from its local government before July 1, 2026. Planned or unfinished housing must have improvements on land owned by the nonprofit or an entity it controls or wholly owns. Owners may still owe payments agreed with the local government instead of taxes. The tax changes took effect July 1, 2026.

The law changes which nonprofit housing corporations qualify under these tax exemption rules. These rules exclude Baltimore City property and projects owned by nonprofits or entities they control or wholly own that received local government development aid before July 1, 2026. Corporations must be incorporated in Maryland or authorized to do business there, have federal 501(c)(3) charitable status, and primarily develop, own, or operate safe and clean affordable housing. Rental housing must have an awarded or approved federal low-income housing tax credit and a binding agreement under that program, or meet the local approval route. Locally approved housing must reserve at least 50% of units for households earning at or below 60% of the area's middle income. That route caps rent at 30% of the income benchmark for a four-person household at or below 60% of the area's middle income, adjusted to 1.5 people per bedroom. The eligibility changes took effect July 1, 2026.

Courts cannot seize or sell covered nonprofit housing to collect a judgment, and the judgment does not become a claim against that property. The protection covers real estate owned by a nonprofit housing corporation and used to house people who meet income limits. Lenders can still enforce recorded mortgages and deeds of trust, which secure loans against property. Creditors can still enforce claims the nonprofit granted against rents, fees, or other revenue. Local governments can still collect agreed payments instead of taxes using tax collection rules. The protections took effect July 1, 2026.