Maryland Homestead Credit Act

Maryland's Homestead Tax Credit alleviates high increases in taxes based on property assessments.

Maryland's Homestead Tax Credit was established to assist homeowners who faced large increases in the assessment of their principal residence. The credit limits the increase in taxable assessments each year to a fixed percentage, according to the Maryland Department of Assessment and Taxation. Local governments are limited to no more than 10 percent taxable assessment increases per year. The credit is calculated on any assessment increase exceeding 10 percent, or the lower cap enacted by the local governments, from year to year.

How it Works

The Maryland Department of Assessments and Taxation provides this example to illustrate how the Homestead Tax Credit works. Assume that your old assessment was $100,000 and that your new phased-in assessment for the first year is $120,000. An increase of 10 percent 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.

Application

To decrease the number of fraudulent claims, the tax credit was amended in 2007 to require an applicant to establish eligibility for the credit. The form is mailed by the Department of Assessments and Taxation to homeowner and available on the department's website. In addition to the application, homeowners must include a statement that by law must be made "under oath that the facts stated in the application are true, correct, and complete." The application must filed on or before July 1 of each year to receive the tax credit for that tax year.

Conditions

In order to qualify for the Homestead Tax Credit, the home must be the applicant's principal residence for at least six months of the year. The law provides an exception to this requirement if the applicant can show that she was unable to reside at the residence due to illness or need of special care. Other conditions include that during the previous tax year the property cannot be transferred to new ownership, be rezoned to result in an increased value of the property, have a substantial change to the use occur, and that the previous assessment was not clearly erroneous.

Appeals

Denial of a Homestead Tax Credit can be appealed by contacting the Central Office for the Homestead Tax Credit Program. Final denials by the Central Office may be appealed to the Property Tax Assessment Board in the jurisdiction where the property is located.

Further Information

If you need help filling out the forms or have questions about the Homestead Tax Credit, contact the Central Offices for the Homestead Tax Credit at 410-767-2165 or 866-650-8783.

References

• Maryland Department of Assessments and Taxation: Maryland Homestead Tax Credit
• Maryland Code: Tax-Property Title 9 Property Tax Credits and Property Tax Relief Section 105 Homestead Property Tax Credit
• Maryland State Department of Assessments and Taxation: Commonly Asked Questions on the Homestead Tax Credit Application