Deadline Approaching: What You Need To Know About The Maryland Homestead Tax Credit

 
Blogger's Note: One of my favorite local (and trusted!) lenders, Jeri Benner, from FitzGerald Financial Group reminded me of this today, and I wanted to make sure nobody missed out!


December 31, 2012 at midnight is the deadline to file an Application for Homestead Tax Credit.  

What is the Homestead Credit?

It is designed to help homeowners manage large assessment increases on their principal residence. The Homestead Credit limits the increase in taxable assessments each year to 10% or less each year. View a listing of homestead caps for each local government here..Technically, it is actually a credit calculated on any assessment increase exceeding 10% (or the lower cap enacted by the local governments) from one year to the next. In other words, the homeowner pays no property tax on the market value increase which is above the limit.

Example (from the State of MD website):

Assume that your old assessment was $100,000 and that your new phased-in assessment for the 1st year is $120,000.  An increase of 10% would result in an assessment of $110,000.  The difference between $120,000 and $110,000 is $10,000.  The tax credit would apply to the taxes due on the $10,000.  If the tax rate was $1.04 per $100 of assessed value, the tax credit would be $104 ($10,000 ÷ 100 x $1.04).

How to File/How to Check a Status  

Not sure if yours is on file? It only takes a minute to check to see if you have filed or to see if you are approved. Follow these steps:

1. Click on this link:  http://sdatcert3.resiusa.org/rp_rewrite/ 
2. Select your County.
3. Enter your street number and street name. Do not include Street, Court, Drive, etc. 
4. Look at the bottom of the page and see if your Homestead application was filed. If it was filed, the entry will show the date your application was approved.
5. If it says "No Application" then click on this link for the application: http://www.dat.state.md.us/sdatweb/Homestead_application.pdf

It is important to note that after you have filed and been approved, you may not receive a credit on your tax bill. Remember that these credits only appear when the assessed value of the property has increased over the allowable limits each year. With declining assessment values in some areas, you may not actually receive a dollar credit each year. However, in a gradually improving market, you want to make sure you are eligible each year, so it is well worth filing and/or checking to see that your application stays on file.

 Some Specifics/Conditions to Keep in Mind:

• It does not matter whether you have owned your house one year or twenty years. An application must be filed by the end of the calendar year. 
• If your application is already on file and approved, you DO NOT need to reapply. 
• The tax credit will be granted if the following conditions are met during the previous tax year:
• The property was not transferred to new ownership.
• There was no change in the zoning classification requested by the homeowner resulting in an increase value of the property.
• A substantial change did not occur in the use of the property.
• The previous assessment was not clearly erroneous.  
• Dwelling must be the owner’s principal residence and the owner must have lived in it for at least six months of the year, including July 1 of the year for which the credit is applicable (unless the owner was temporarily unable to do so by reason of illness or need of special care).  
• An owner can receive a credit only on one property---the principal residence.

To learn more about Maryland's Homestead Tax Credit, visit http://www.dat.state.md.us/sdatweb/homestead.html