The Maryland Homestead Act

The homestead tax credit helps homeowners who face large increases in property assessments.

Maryland's Homestead Tax Act was enacted to help homeowners pay property taxes on large increases in property assessments. The homestead credit limit's the increase in property taxes to a fixed percentage each year.

Limitation

Maryland counties are required to limit property tax assessment increases to no more than 10 percent per year until the property reaches the assessed value.

Residence

The homestead tax credit can be used only on a property owners primary residence. A principal residence means that the owner lives in the house for at least six months out of the year.

New Owners

If a property is sold, the assessed value becomes the amount that the property was sold for. The new property owners must pay taxes on the new assessed value.

Requirements

To claim the homestead tax credit, the property cannot be sold to new owners in the previous year, no change can have been made in the zoning or in the use of the property and the previous assessment cannot be clearly erroneous.

Reassessment

The tax credit is primarily for people who have lived in their house for a long time. New homes are reassessed when sold. Maryland reassesses property every three years and bases the value on the price that comparable houses sold for.

References

• Maryland Department of Assessments and Taxation: Maryland Homestead Tax Credit