Maryland residents must apply to get Homestead credit

January 04, 2008|By JOSHUA BOWMAN

A recent change to a decades-old tax credit could leave local property owners with higher tax bills if it is ignored, state tax officials said Thursday.

The Homestead Property Tax Credit, which limits property tax increases on owner-occupied residences, has been automatically granted to Maryland residents since 1977, according to Robert Young, associate director of the Maryland Department of Assessments and Taxation.

But under a law passed by the Maryland General Assembly last year, taxpayers now must submit a one-time application to continue receiving the credit.

The change was made to prevent taxpayers from using the credit on multiple residences such as vacation homes and rental properties, Young said.


"This credit was designed as a tax break for primary residences," Young said. "Now, we have a way to verify that a property is in fact the owner's home."

But Young and others said Thursday they were worried that some residents might disregard the application.

"With anything new, you're concerned that it might not catch the eye of everyone," said Tim O'Rourke, supervisor of assessments for Washington County.

Property assessments increased 40.2 percent over three years in Washington County.

But the Homestead credit limits the amount of tax that residents have to pay on that assessment. In Washington County, property tax increases on primary residences are limited to 5 percent per year.

For example, a Washington County home assessed at $100,000 three years ago now would be assessed at $140,200. But the taxable portion of that amount would be limited to $115,000 under the Homestead credit. At the county's current tax rate of 95 cents per $100 of assessed value, the owner would save $239.40 with the tax credit.

About 18,000 county residents received new property assessments in the mail this week. The Homestead credit application is included in those mailings.

New assessments were mailed to residents living in Hagerstown, Maugansville, Halfway and the Cedar Lawn area west of Hagerstown, O'Rourke said.

In an effort to ensure that people fill out the application, the amount of money residents save through the tax credit was printed on this year's assessments, Young said.

"Hopefully, when people see how much of their assessment they're not paying taxes on, they'll be more likely to send in the application," Young said.

Residents who did not receive assessments this year do not have to fill out the application until their home is assessed. Assessments are done in Maryland every three years.

In addition to receiving the application in the mail, residents also may submit the application online. The application will be available until April 8 at

People with questions about the Homestead Tax Credit may call 1-866-650-8783.

Tax credit conditions

The Homestead Property Tax Credit is available to all property owners on their principal residence as long as the following conditions were met during the previous tax year, according to the Maryland State Department of Assessments and Taxation's Web site:

· The property was not transferred to new ownership.

· There was no change in zoning classification requested by the homeowner resulting in an increased value of the property.

· A substantial change did not occur in the use of the property.

· The previous assessment was not clearly erroneous.

· The owner must have lived in the residence for at least six months of the year, including July 1 of the year for which the credit was applicable, unless the owner temporarily was unable to do so by reason of illness or special care.

· An application to continue receiving the Homestead Property Tax Credit is available at

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