Maryland Homeowners Must Now Apply for Homestead Tax Credit

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As of January 1, 2008, property owners of a principal residence in Maryland are required to file a one-time application in order to receive the Homestead Tax Credit. This credit limits the amount of assessment increases for real estate tax purposes. Previously, eligibility for the credit was automatic, but legislation passed in 2007 by the Maryland General Assembly mandates the one-time paper or online application filing.

The Maryland Department of Assessments and Taxation will be sending notices to all homeowners beginning in January 2008 for the 1/3 of homeowners being reassessed for this year. All other homeowners (the other 2/3) who will be reassessed in 2009 and 2010 do not need to file the application until that time, and may not receive a notice of the one-time application until they receive their statement of reassessed value.

The Homestead Tax Credit only applies to principal residences, not rental or vacation properties. It can, however, provide a significant savings for residents. To use a personal example of how important the credit can be for homeowners (and thus the importance of submitting the application in a timely manner), the Homestead Tax Credit reduces my annual property tax bill by about 35%.

More information about the Homestead Tax Credit and the now mandatory one-time application can be found at the Maryland Department of Assessment and Taxation website.

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UPDATE: There has been some uncertainty regarding the process of applying for the Homestead Tax Credit. The specific application deadline for homeowners depends on when their property is due for reassessment, as set forth below:

*If your property was scheduled for reassessment in January 2008, your assessment packet should have included an application for the Homestead Tax Credit. In order to continue to receive this credit, your application should have beeen returned to the State by April 1, 2008.

*If your property was scheduled for reassessment in January 2009, your assessment packet should have included an application for the Homestead Tax Credit. In order to continue to receive this credit, your application must be returned to the State by April 1, 2009.

*If your property is scheduled for reassessment in January 2010, your assessment packet should include an application for the Homestead Tax Credit. In order to continue to receive this credit, your application must be returned to the State by April 1, 2010.

Homeowners may also apply for the Homestead Tax Credit online once they receive their assessment packet at https://sdathtc.resiusa.org/homestead.

To determine when your property is scheduled for reassessment, if you believe you may have missed the filing deadline, or have specific questions about your eligibility for the Homestead Tax Credit, consult your tax assessment packet or contact the Maryland Department of Assessments and Taxation by calling 410-767-2165 in the Baltimore metropolitan area or 888-650-8783 toll free elsewhere in Maryland.

Branden Schroeder -- Associate Broker, LEED AP
Coldwell Banker Residential Brokerage -- Annapolis, MD

Please visit my
Maryland Homes and Property website or call (443) 333-9060

Comments (35)

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Louis Wilen

Please note that that the Homestead Property Tax Credit is entirely separate from the Homeowners’ Property Tax Credit. In the past, it was not necessary to apply for the Homestead Property Tax Credit, as the credit was applied automatically when appropriate (and many times, when inappropriate, and that's why the new law was passed). The Homestead Property Tax Credit application must be completed just one time, unless you move to another home. The form is very simple and quick to complete. A yearly application has always been required and is still required to get the Homeowners' Property Tax Credit, as that credit requires that the applicant's income for the past year be stated on the application form. Generally, only low to moderate income homeowners qualify for the Homeowners' Property Tax Credit, whereas there is no income limit for the Homestead Property Tax Credit.

Branden Schroeder

Thanks for the comment, Louis. You are correct that the "Homestead" credit and "Homeowners" credit are two distinctly separate property tax credit programs. The similarity in names may cause some initial confusion. To be clear, the "HOMESTEAD" Tax Credit is available to all Maryland principal residence homeowners and it is this credit that had previously been automatically applied but now will require the one-time application. The "HOMEOWNERS" Tax Credit eligibility is limited to homeowners with low income (along with a few other factors) and must applied for annually.

samuel presgraves

How do I know if I have recieved the Homestead Tax Credit

I sent in the aplacation when it came with the assesment

Branden Schroeder

Submitting the one-time application is all that is required to ensure eligibility for the Homestead Tax Credit. If you want to confirm that the application was properly received, contact the Central Office for the Homestead Tax Credit Program at (410) 767-2165.

samuel presgraves

Thank You for your quick repy

Brad

is there is dead line.....some how i seem to have missed the news

suma

Looks like we have missed this also. I don't remember receiving any application. We bought a new home in 2007 May. Could it have been missed due to that?

Kindly advise,

Suma.

Branden Schroeder

I have updated this blog article to include specific information regarding application filing deadlines. See the section titled "UPDATE". I hope this clarifies things. Please let me know if you have additional questions.

Sydney Plumber

This is really a nice post

Lizzy

I don't understand why the MD website does not clarify these deadlines. Where did you find these specific deadlines? Why hav I heard that these are artifciale deadlines?

Branden Schroeder

I agree that the Maryland Department of Assessments and Taxation and the administering counties/municipalities have not done an ideal job of explaining the deadlines or making it clear to homeowners which year in the three year re-assessment rotation a particular property falls within. Questions regarding enforcement of the stipulated deadlines should be directed to the Maryland Department of Assessment and Taxation or the agency within your county/muncipality that oversees property assessments.

walter mccauley

we just got our house assessed again because it was assessed as a three unit house which it has not been for 20 yrs how do i apply for the homestead cedit and how do i find out how to apply for the homeowner credit ty

Branden Schroeder

Walter, my recommendation would be for you to contact directly the Maryland Department of Assessments and Taxation about your specific assessment and homestead/homeowner credit concerns by calling 410-767-2165 or 888-650-8783.

Gary Litchfield

Concerning each tax credit (Homeowners and Homestead): if I rent a room to a student within my own permanent residence, are these credits affected in any way? Thanks.

Wick

Brandon, thanks for this great info. If one were to buy a property in Baltimore City that was just (11/08) assessed at 150k for purchase price of 250, will house be re-assessed upon sale? Or will house not be re-assessed for two years (11/2010, ie on its 3-year schedule)? Reason I ask is, is there any way to use HomeStead Tax Credit to maintain assessment of 150 in this situation? THANKS

Branden Schroeder

Gary, the Homestead Tax Credit is not affected if you rent out a portion of your home as long as you maintain the home as your principal residence.

Wick, the 3-year re-assessment schedule is not affected by the sale of a residence. The re-assessment will always occur every three years. Keep in mind, however, that the previous owner's tax bill may be lower than what you will pay if the previous owner had the benefit of the Homestead Tax Credit. New owners are cannot receive the benefit of the Homestead Tax Credit until they have owned the property as a primary residence for one full year. If you believe the assessed value is to high, there is an appeal process available. For info on the appeal assessment process, go to http://www.dat.state.md.us/sdatweb/appeal.html.

Bret

I made a mistake and managed to miss the notice to reapply for the Homestead tax credit. As a result, my taxes skyrocketed, and my mortgage payment due to escrow shortage and future estimate is increasing by 50%. It is obviously not a great situation.

I have lived here for 6 years. Is there anything I can to to help get myself out of this situation? I faxed a reuest to my county tax office to try and get the error corrected. Will I get my overpayment of taxes back once my homestead is reapplied? Is there anyway to expedite the process? Is here any possibility of getting my mortgage lender to delay the increased payments untl this is straightened out?

Thanks for any advice you can give. I dont know how long I can afford the increased mortgage payment.

Branden Schroeder

Hello Bret, please feel free to contact me directly for specific information related to your particular circumstances: 443-995-7931

Reba

We recently changed the deed on a home we own which was not our principle residence. We recently gifted our adult daughter partial ownership and her name now appears on the deed with our names. She has lived in the home for the past year. As a partial owner Is she entitled to tthe Homestead credit? She will be paying the taxes if that makes a difference.

Branden Schroeder

Reba, due to the unique circumstances of your situation, my recommendation would be to contact the Maryland Department of Assessments and Taxation directly by calling 410-767-2165 to inquire about the government's position on this issue.

Adeola Okubanjo

I just found my application for the homestead tax credit which was sent Dec 2009, is it too late for me to apply?

Branden Schroeder

Adeola, electronic filings are still available and that would be the quickest method to get the application submitted, but you may also want to check with the Department of Assessments and Taxation (410-767-2165) to see if there is anything else that needs to accompany a late filing. My recommendation would be to do this as soon as possible so you don't jeopardize your property tax credits.

Louis Wilen

It's not too late to file - so go right ahead and submit the form either on the DAT web site or by sending in the paper form.

The homestead credit verification form was sent to homeowners in 2008, 2009, and 2010 with their assessment notices. (One third of all homeowners are assessed each year.) Therefore, by January 2010, all homeowners had received the form and *should* have submitted it either on the web or by postal mail.

Under the provisions of the Homestead Credit Verification Act, in 2011 and 2012 the Department of Assessments and Taxation will attempt to contact those who did not submit their homestead credit verification form during the initial 2008 - 2010 filing period. There will a major "outreach" program to try to ensure that every homeowner who is entired to the credit gets it.

Homeowners who do not file the homestead credit verification form by 2012 will, as I understand it, lose their principal residence status -- and any applicable homestead credit -- starting in 2013. However, homeowners can file the form in 2013 and beyond, although they may lose the credit for any years which the form was not on file, starting with 2013.

Ben

I bought a house July 10th, 2009 and never received a Homestead Tax Credit. I see that I will not receive any benefit until living in my house for a year, which is now the case. Do I send in the form now? Also, I received my real property tax semi-annual bill (2009-2010) back in December 2009 and paid. Now, on top of the new bill for 2010-2011, I received a "revised" bill for 2009-2010 which removed the state/city assessment credits and now is charging me almost 3x as much! I was told at settlement that I would receive the previous owner's tax credits because my closing date was after July 1st, but that during this year (2010-2011) my taxes would increase because I have technically lived in the property less than a year before Property Taxes are issued July 1st. This seems to be the case, except that the state has decided to erase the assessment credits I received on my December 09 bill and revised them to be non-existent. Any ideas would be much appreciated and thanks.

Branden Schroeder

Hello Ben. It is correct that Homestead Tax Credit only goes into effect after residence in the property for one year. The credit limits (after one year) the taxable assessment increases for each county/municipality to 10% or less each year. As a new homeowner, you are not entitled to any of the credits the previous owner utilized (which may have been substantial if the previous owner resided in the property for a long time). Depending on when you go to settlement on a new house, the first property tax bill you receive may still show the credits that had been available to the prior owner, which appears to have happened in your case. But, once the county/municipality processes your ownership, those credits will disappear and you will be taxed at the full assessment value of the property for the first year of ownership. Based on your explanation, this seems to be what happened in your case. There are two things I would recommend initially: (1) definitely file the Homestead Tax Credit form either online or via the mail; (2) explore whether you may benefit from an appeal of your taxable assessment value on the property. Details regarding the appeal process are provided at http://www.dat.state.md.us/sdatweb/appeal.html If you'd like to discuss any of this further, please feel free to contact me directly for specific information related to your particular circumstances at 443-995-7931.

Adam

Hi Branden,

Thanks for all of this great info! I was just advised by my mortgage company that my monthly mortgage payment will be increasing by $230 a month total, $121 of which is b/c we have low escrow. this is due to the fact that at our closing they only estimated one of our bi-annual payments (half of our taxes) into escrow and apparently they're adjusting escrow now due to the negative balance. the $121 coupled with our home owners (hazard insurance) being added into our montly payment is increasing it by $230 total!! obviously i was totally shocked when i saw this on my bill. Is it normal for them to have only estimated using the one payment and not both? is there any recourse i have at this point, i feel like someone should have mentioned that our mortgage would be increasing at some point? i spoke to them and they said that it was only estimated using one of the bi-annual payments b/c we closed in october to where if we closed later they said they would have used 2. information i could have used yesterday . . .

We never picked up on it b/c the seller said their taxes were $3,600, but apparently that was b/c of the homestead, so our taxes all the long have actually been $5,000! (2 payments of $2,500).

Thanks for all of the great advice!!

Adam

susan ondrushek

Dear Branden,

We just received our mortgage reevaluation from BAC. The escrow went up $400.00 a month due to the pervious owners tax credit expiring, plus we are short on escrow for 2010!!!. Oct/2010 is our 1 yr of homeownership here. How soon can I get the tax credit? I spoke with someone in the stste office 9 months ago and they had very little detail on the matter. Help, Susan

Branden Schroeder

Adam: Unfortunately, many new homeowners like yourself are stunned to find property taxes and assessed values jump up dramatically after taking ownership because the previous owners had been enjoying the benefits of the Homestead Tax Credit that is not available until a new homeowner lives in the residence for one year. The shock is largely due to incompetence or errors made by real estate agents and/or title companies in not properly explaining (or even understanding) property tax implications for purchasers. I'm not certain how/why your lender or title company so grossly under-estimated monthly escrow payments. Was the lender from out-of-state? If so, the lender may not have been familiar with Maryland property tax rules and the title company may have simply followed the numbers provided by the lender. It seems to me someone should have caught that error.

Susan: You are eligible immediately for the tax credit once you have resided in the home for one year, which means amount of assessment increases for real estate tax purposes will be limited from now into the future for the entire period of your ownership. Make sure your Homestead Tax Credit application has been filed with and received by the Maryland Department of Assessments and Taxation. Also, you may want to evaluate whether you could benefit from an appeal of your taxable assessment value on the property. Details regarding the appeal process are provided at http://www.dat.state.md.us/sdatweb/appeal.html. Your county/municipality may be assessing your property at too high a value. A successful appeal could result in a reduction of your real property tax liability. If you'd like to discuss any of this further, please feel free to contact me directly for specific information related to your particular circumstances at 443-995-7931.

fred smith

Dear Brandon,

Can you tell me what the requirements are for the "Homestead Tax Credit" are? Can you say what are the restrictions? If the filing date of April, 2010 has passed, can I still receive the credit, if I have not yet paid my Property Tax bill for 2010?

Thank for your help. FRED

Branden Schroeder

A full explanation of the Maryland Homestead Tax Credit, including requirements and special conditions, is provided at the following Maryland Department of Assessment and Taxation webpage: http://www.dat.state.md.us/sdatweb/homestead.html. If you believe you may have missed the filing deadline, or have specific questions about your eligibility for the Homestead Tax Credit, consult your tax assessment packet or contact the Maryland Department of Assessments and Taxation by calling 410-767-2165.

Kim

I am hoping to settle on my first house this month. So far, during this process nobody has discussed the property taxes with us and whether or not the Seller's property taxes includes their Homestead tax credit and what to expect when the 3rd installment of the phase-in assessment value occurs in July. If the Seller's Homestead Credit is present is there any way for us to make sure it comes off asap? How can we figure out how much the property tax is going to increase in July? I am just not sure how to be proactive and I don't know if it is even possible to avoid going into negative escrow.

Branden Schroeder

Hello Kim. There are a variety of issues particular to the property that I'd need specific details on to answer accurately. I'll send you a private email to get further information from you. Or, feel free to call me at 443-995-7931.

adam

Hey Branden,

I just wanted to follow-up with you since you responded to my question from 6 mnths ago. You are correct, the lender (Wells Fargo) was from out of state. They referred me to their "relocation division" and said they were "experts" in assisting people that relocate. Which in some ways they were, b/c they were on top of helping us list things on the HUD in certain locations that would benefit us. On the other hand, they messed this up royally. And i'm told from fellow co-workers that i'm not the only one (as you mentioned that this is common for new home owners that don't know any better). I later spoke with someone from a local office whom said they wished that their corporate office would refer to the local b/c they would have caught this in a heart beat. Obviously I've been referring friends to the local office since.

Anyway, just wanted to say thanks for all the valuable advice, you provide a great service here. Thanks for the explanation on the tax credit, i checked with the MD office of taxation and they have my application . . .

Adam

Branden Schroeder

You are welcome, Adam.

Kathryn Myers

My husband and I are divorced. We are settling on our house on July 19, 2011. We have recieved the credit on the house we are selling. I am purchasing another property. He lives in PA. Will I be able to claim the credit either via transfer or another way? Do I have to live in the new house for 1 year before I can claim the credit?

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