Property Taxes: Some Basic Q&A's

The Department of Finance has prepared a few basic questions and answers to help clarify property tax issues for residents.

Q.My tax increased more than inflation. I thought the County Charter said that property taxes cannot increase more than inflation.

A. Montgomery County's Charter Limit on property taxes requires that total property tax revenues from all properties cannot increase more than the rate of inflation and the value of new construction. Although the average tax bill increases at the rate of inflation, some properties may increase less than inflation, while others increase more than inflation, depending on assessment cycles, assessment amount, when properties were purchased, homestead credit and other credits.

Q.Why was there a 4-cent increase per $100 of assessed value this year?

A.This year, there was an option to either reduce the County rebate (officially called the income tax offset credit) from last year's $692 or raise the tax rate to increase revenues to the Charter Limit. The County chose a combination of a smaller rate increase and keeping the credit at last year's amount since that would limit a significant tax increase for lower- and middle-valued properties.

Q. My assessment went down, but my tax bill increased more than 10%. Why?

A. If your property increased a lot in value several years ago, you would have benefitted from the homestead credit which caps growth in taxable assessment to 10% per year. During those years, you did not pay property taxes on the homestead credit amount. If the new "reduced" assessment this year is higher than last year's taxable assessment, the base still went up. For example, say last year's assessment was $600,000 and there was a $100,000 homestead credit. That meant the taxable assessment was $500,000 and it was used to compute the property tax. If your new assessment this year is $550,000 (down from $600,000), that is still above last year's taxable assessment allowing the base to grow the full 10% to $550,000 (i.e., $500,000 plus 10% = $550,000).

Q.Why is my assessment much higher than what houses sell for in my area?

A. The State of Maryland assesses each property every three years, with increases phased in over three years. A decline is reflected immediately in the first year of the triennial cycle. The State Department of Assessments and Taxation (SDAT) conducts the assessments and handles the appeals. The local SDAT office is in Rockville and they can be reached at 240-314-4510. If you believe the assessed value is too high, call for more information or file an appeal with SDAT to start the appeals process. Montgomery County has nothing to do with property tax assessments. That is solely the responsibility of the State of Maryland.

Q. I am a senior citizen and am struggling with paying my property taxes. Is there a program that might help?

A. Depending on your income compared to the amount of the tax bill, there may be tax relief available through three different programs: the State Homeowners Property Tax Credit (HOTC), County Supplemental Tax Credit and County Senior Credit (if 70 years or older). SDAT administers these credits and reviews applications for eligibility. The good thing is that you file only one application with SDAT, and they will automatically review eligibility for all three programs. They can be contacted at 800-944-7403 (toll-free). Also, although the filing deadline is generally September 1, SDAT just extended the filing deadline to October 31, 2011. If you are approved for one or all of these credits, it would adjust this year's tax bill.

Get more information on the tax credit programs.

POSTED AT: Friday, September 30, 2011 | 4:30:00 AM |
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