What is the Homestead Credit?
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).
If your home was reassessed in 2007 or if you purchased your home in 2007--your application must be submitted by April 1. Others will still need to complete the application but your deadline is not immediate. I would complete the application, mail it certified, and keep it with your tax files regardless of your deadline.
To receive information on the Homestead Credit:
www.dat.state.md.us/sdatweb/homestead.html
To receive the application that needs to be completed:
www.dat.state.md.us/sdatweb/Homestead_application.pdf