Maryland Real Estate Tax Information

Find out about real estate taxes in Maryland.

Chesapeake Bay and easy access to the Greater Washington, D.C., area are but two of the reason you may be interested in living in Maryland. Living in Maryland may also mean buying a home. And with buying real estate in Maryland comes the responsibility of paying real estate taxes. Since the real estate taxes vary from state to state, understanding how Maryland deals with real estate taxes is an important factor in making your decision to purchase, or coming to understand what you need to know if you're already a property owner.

Assessment

Property taxes in Maryland are calculated using the fair market value of the real estate property. In Maryland, an assessment is made on the property once every three years. A series of criteria is used by the tax assessor to determine the value of the real estate. Criteria include the property value of comparable or similar properties to your real estate, the replacement cost of your home and an estimate of repair and maintenance costs. Every third year when it's time to assess the property value, the tax assessor visits the real estate property, gathers the features in your home and then compares the features with the other comparable properties in the area. Based on the assessment, real estate taxes can either increase or decrease from year to year.

Rate

The real estate tax rate for Maryland is a combination of state, local and county taxes based on where the property is located. Some areas in Maryland also include municipal taxes. Real estate taxes are based on the tax rate (which is expressed as a dollar amount) for every $100 of assessed value of the real estate. For example, if the market value for a piece of real estate in Maryland is $100,000, then the property taxes are determined by dividing the assessed value by $100 and then multiplying the product by the real estate tax rate. If the overall tax rate is $1.08 per $100, then for the previously mentioned example, real estate taxes would be $1,080 ($100,000 divided by $100 times $1.08).

Median

According to CNNMoney.com, in 2009, the median assessed value for Maryland single-family homes was $275,000. The median home value, based on the previous example tax rate, equates to the average annual property tax of $2,970. Real estate taxes, however, vary by city, county and municipality where the property is located.

Real Estate Tax Relief

The Maryland Department of Assessments and Taxation also works with real estate property owners that may be having a hard time meeting their real estate tax obligations. To find out about the real estate property tax relief programs available through the Maryland state departments, call 800-944-7403.

Tax Credit Program

The most popular and largest real estate property tax programs offered in Maryland is the Homeowners' Property Tax Credit Program, which is also called Circuit Breaker. The tax credit program permits one out of every 17 homeowners who qualify according to set income standards to help homeowners cover their real estate tax obligations through the Maryland state funded program that offers more than $49 million in support to help homeowners with their property tax payments. Homeowners must submit an annual application for qualification under the program and if approved, the program does not pay the entire tax obligation. The amount of the credit is calculated using a sliding scale, with support amounts diminishing as the gross income of the homeowner increases.

Homestead

Maryland is a homestead state, so real estate taxes on a primary residence in the state are reduced by reducing the assessed value of the real estate. In Maryland, the state tax credit for a homestead residence applies when the assessed value of the primary, owner-occupied residence increases more than 10 percent over the prior year. Under the homestead exemption, county and municipal governments are required to set a homestead credit percentage rate between 0 percent and 10 percent (to calculate local real estate taxes).

Real Estate Tax Deferral

For Maryland homeowners over the age of 65, the state allows the homeowner to defer an increase in their real estate tax bill. Local governments where the property is located can allow or deny this deferment, which is a power provided by Maryland state law. If the homeowner opts to defer the real estate taxes, the tax amount becomes a lien on the property. Repayment of the lien must be made when the ownership of the property transfers. Montgomery County offers the deferral program to homeowners of all ages, as long as they meet the county's residency and income requirements.

References

• Maryland Department of Assessments & Taxation: Property Taxes and Assessments
• Visit Maryland: All About Maryland
• CNNMoney.com: Maryland