What Is The Maryland Homestead Tax Credit?
The Maryland Homestead Tax Credit is a credit applied to any taxes that would be paid on a property assessment in excess of 10% over the previous assessment. In other words, if a property is re-assessed at more than 10% of its previous value, the Homestead Tax Credit ensures that tax is only paid on the first 10% of the increase.
The credit applies only to residential properties that are occupied by the owner. Furthermore, the credit is based on the total assessment for the land and all structures combined. The credit is not intended to keep the assessment of a property from increasing, just the tax paid on that assessment.
So, your Maryland home may see its value increase by 15 or 20%, but you will only pay tax on the first 10%. However, you must file an application to be eligible for this credit.
Maryland Homestead Tax Credit Application
Maryland real estate property owners received an assessment notice containing a Homestead Tax Credit Application for the first time on January 1, 2008. This one-time application must be submitted in order to ensure that the credit is granted only on eligible properties and not on properties that are rented or used as vacation homes.
Various conditions determine the eligibility of a property for the Maryland Homestead Tax Credit. These include:
- The increased assessment was not the result of a zoning classification requested by the owner
- The property has not been significantly repurposed
- The re-assessment was not based on a previous error
- The property must be the owner's principal residence, and they must have lived there for at least six months
Maryland Homestead Tax Credit Application Appeals
You can appeal a homestead tax credit application decision by contacting the Central Office for the Homestead Tax Credit Program at 1-866-650-8783 (Maryland) or 410-767-2165 (Baltimore Metro). Subsequent appeals should be directed to the Property Tax Assessment Appeal Board within 30 days.
Homestead Tax Credit - More Info
For commonly asked questions and to file an application on-line visit the Maryland State Department of Assessments and Taxation website or mail the paper form in the postage-paid envelope included in the assessment notice.
For more information on the Maryland Homestead Tax Credit, get in touch with local real estate experts at Northrop Realty. We will be happy to answer any questions you may have about real estate in Maryland.