Homeowners wondering about the new, strange-looking application in their property tax assessments might be looking at a way to help defray the costs of rising market values of their homes.
The state?s Homestead Property Tax Credit limits the increase in taxable assessments on an owner-occupied, single-family home. Those in the Homestead program can lock in the assessed value of their homes to increase no more than a cap determined by each county and Baltimore City. The cap can be no higher than 10 percent. Without the program, the taxable assessed value of the homes will increase by their full amount. Properties are assessed every three years.
“This is to protect the long-term homeowner in a period of rising assessment,” said Robert Young, associate director of the state Department of Assessment and Taxation.
To be eligible for the credit, the property must not have changed ownership in the previous year. The homeowner also must not have requested a zoning change that resulted in an increased value of the property, no substantial change must have occurred in the property?s use, and the previous assessment must not have been erroneous.
Young said 1.5 million homeowners statewide receive this credit but now must officially apply with a one-time application.
A law enacted last year requires all homeowners to submit the application to establish eligibility for the credit. The application will be included in the assessment notice mailed to one-third of homeowners at the end of December for the next three years, as well as new purchasers of residential property. Applications can also be made through the department?s Web site at www.dat.state.md.us.
Electronic applications will be accepted through April 1, Young said, with paper applications accepted for a short time after that date.
Young said only homeowners who received an application this month need to register; others will receive applications with their new assessment notices in coming years.
The program might not help new homeowners but could assist long-term owners looking to curb their taxes, said Scot Millen, director of client services for Baltimore-Washington Financial Advisors.
“One group that really benefits from it is probably retirees living on a fixed income, especially if they?re living in a locality with low [property] taxes,” Millen said. “That can be meaningful in this area, where housing values have appreciated rapidly, with the last two yeas being an exception.”
How it works
» Example: A home in Baltimore City was assessed at $100,000. In its new assessment, conducted every three years, its taxable value increases to $160,000. Under the Homestead Property Tax Credit program, its taxable value can increase by only 4 percent, or $4,000, the cap determined by Baltimore City. Without the program, the homeowner will pay taxes on the full increase in the assessment.
» Under the program, the taxable value of the home will increase only by the cap percentage year after year, regardless of how much the home?s assessment increases. To find out what your local Homestead credit cap is, go to www.dat.state.md.us/sdatweb/homestead_percent.html.
