A new tax incentive program for historic buildings has been initiated that will give homebuyers a credit equal to 25 percent of rehabilitation costs.

The state mortgage credit certificate option -- called the Heritage Preservation Tax Credit Mortgage Credit Certificate Option -- allows an owner of a qualified historic residential or commercial property to receive a credit equal to 25 percent of the rehabilitation costs on the property.

The owner can use the credit to lower the state income tax or transfer the credit to the institution that lent the rehab money. The lender, in turn, can lower the borrower's mortgage amount or the interest rate on the loan.

The law takes effect Oct. 1 for all taxable years beginning after Dec. 31, 1998.

For more information, call the Maryland Historical Trust's Office of Preservation Services at 410-514-7627 or 410-514-7628.