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Category: Tax

Home Owners’ Tax Credit – Apply by Oct 1st

The State Homeowner’s Property Tax Credit Program allows income-eligible homeowner’s to receive a reduced property tax bill. For more information about this program, click here. Applications are due by October 1st annually. Please apply now. This program can be used in conjunction with the homestead tax credit program.

County Council Considering Changes to the Homestead Tax Credit Cap

County Council Member Davis is proposing to add a question to the November ballot to change the County Charter and amend the homestead tax credit cap that was passed in the early 1990s.  Charter changes require legislation.  A formal public hearing would be held on July 21st.  At that time, the County Council can decide to request the question be posed to voters in November.

The proposed bill CB-48-2020 will be sent to Committee immediately tomorrow for consideration.

Since 1992, the homestead property tax credit has limited County tax assessment increases to the LESSER of the increase in Washington area CPI OR 5% (that is 5% maximum). If approved, the County Charter would be amended to allow an annual assessment to increase up to the State maximum of 10%.

To help homeowners deal with large assessment increases on their principal residence, state law has established the Homestead Property Tax Credit. The Homestead Credit limits the increase in taxable assessments each year to a fixed percentage. Every county and municipality in Maryland is required to limit taxable assessment increases to 10% or less each year. View a listing of homestead caps for each local government.

Technically, the Homestead Credit does not limit the market value of the property as determined by the Department of Assessments and Taxation. Instead, 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. The credit is calculated based on the 10% limit for purposes of the State property tax, and 10% or less (as determined by local governments) for purposes of local taxation. In other words, the homeowner pays no property tax on the market value increase which is above the limit.

Example:
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).

Despite Reduced College Park’s Tax Rate, Your Tax Bill May Still Go Up. Homestead Tax Credit Will Help

In case you haven’t applied for the Homestead tax credit application, please do so before the May 1st deadline. This is required if you want to start getting the credit beginning the 2019-2020 tax year. You’ll only need to apply once. Guide on how to fill in tax forms here.

The Homestead Tax Credit law limits the amount of assessment increase on which eligible resident homeowners actually pay county, municipal, and State property taxes each year. This credit can significantly lower your real estate taxes regardless of your property’s value or your income level. If the property is used as your principal residence, you are strongly encouraged
to complete this application.

Residents can only apply for their one principal residence. The application needs to be made only once. The Homestead Tax Credit Eligibility Application is needed to ensure that homeowners receive the Homestead credit only on their principal residence. You can find more about the Tax credit program here.

In order to submit a Homestead Tax Credit Eligibility Application through the SDAT site, you must have been issued from this Department an application containing your Real Property Account Number and an Access Number. You will be required to enter the account and access numbers as part of the submission process.

You can find out if you have already filed an application by looking up your property in the SDAT Real Property database

Based on the tax rates we have for different jurisdictions, I’ve tried to calculate how your tax bill (on your $300,000 home) may look like in the next 2019/2020 tax year, with and without homestead tax credit. Please see the explanation on changes in the right column called “note”. I’ve used this worksheet  for the calculation.

2018/2019 Tax Bill (No Homestead Tax Credit)
JurisdictionTax RateAmounts
P.G. County0.925$2775.00
City of College Park0.335$1005.00
Park and Planning0.294$882.00
State of Maryland0.112$336.00
Stormwater/Flood Control0.054$162.00
P.G.- Supplemental Education0.040$120.00
Transit Commission0.026$78.00
Solid Waste Service Charge$34.42
Clean Water Act Fee$41.48
Total     $5392.42

 

2019/2020 Tax Bill (Without Homestead Tax Credit)
(property value = $360,000, due to increased assessment)
JurisdictionTax RateAmountsNote
P.G. County0.925$3330.00County is proposing not to change its tax rate next year
City of College Park0.325$1170.00College Park’s tax rate will go down by 1 cent next year
Park and Planning0.294$1058.40
State of Maryland0.112$403.20
Stormwater/Flood Control0.054$194.40
P.G.- Supplemental Education0.040$144.00
Transit Commission0.026$93.60
Solid Waste Service Charge$34.42
Clean Water Act Fee$41.48
Total   $6,469.50

 

2019/2020 Tax Bill (With Homestead Tax Credit)
(property value = $360,000, due to increased assessment)
JurisdictionTax RateAmountsNote
P.G. County0.925$2830.50County’s cap on property assessment is 2%. This means, with the homestead tax credit,
you’ll be paying tax on only 2% of the increased assessment, not on 20% increased value
($360,000 over $300,000)
City of College Park0.325$975.00College Park’s cap on property assessment is 0%. This means, with the homestead tax credit,
you’ll still be paying tax on last year’s assessed property value ($300,000),
plus at the reduced tax rate.  Your College Park portion of your tax bill go down from $1005 to $975
Park and Planning0.294$1058.40
State of Maryland0.112$403.20
Stormwater/Flood Control0.054$194.40
P.G.- Supplemental Education0.040$144.00
Transit Commission0.026$93.60
Solid Waste Service Charge$34.42
Clean Water Act Fee$41.48
Total   $5,775.50

[Photo credit: Depositphotos]

College Park Reduces Tax Rate for Home Owners

At last Tuesday night’s meeting, the College Park City Council decided to lower the homestead tax credit rate to 0%.

With this change, College Park will not charge extra tax from its property owners when their property values will go up next year.

I was very happy to support giving more tax breaks to our homeowners at last night’s meeting.

You can find more information about the homestead tax credit program here.

Here is the list of current homestead property tax credit rate of College Park and 18 other cities in Prince George’s County. Most cities will still charge an additional tax on as much as 10% increase of the property value next year. With Tuesday might’s change, College Park will charge none.

Despite Low Assessment, Many May Not See a Smaller Tax Bill

Property tax

Property tax

Last weekend, I met a resident, who told me that his tax bill did not go down a lot despite the fact that his property value went down after County’s last assessment.

This led me to investigate the issue and get me in touch with folks who have been following this closely. If you are one of them, here is what you will need to know.

From the public record, it appeared that the resident had a total reduction of about 18% in his property’s assessed value. This is in line with the case of the most north College Park residents had assessment reductions of about 22-32%.

We looked at the resident’s tax bill BEFORE the Homestead Credit is applied, and found that his property taxes went down a lot. In 2012 his tax bill, before Homestead Credit was reduced by more than $600. The lower assessment was just enough to wipe out virtually all of the Homestead Credit. At the end, his tax bill did go down about $77, though not much.

On top of that, there is a new tax residents will have to pay. This is the Chesapeake Bay new tax of $41. Plus the City’s net tax increase of about $15 from the tax rate increase also worked to limit his tax reduction.

That said,  the resident’s tax bill last year was definitely on the low side, as most City residents had tax bills over $3,000 last year.

Please let me know if you have any questions.

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