Take advantage of tax credit if your primary residence is in Maryland
The Maryland Department of Assessments and Taxation (SDAT) recently announced its 2022 reassessment of "Group 1" residential properties. The overall statewide increase for these properties was 12.0% over the past three years which means you will more than likely see an increase in property taxes. However, you may be able to take advantage of the Homestead Tax Credit to limit your taxable assessment increase.
What is the Homestead Credit?
The Homestead Credit limits the increase in taxable assessments on which eligible homeowners actually pay county, municipal, and state property taxes each year regardless of property value or income level. Every county and municipality in Maryland is required to limit taxable assessment increases to 10% or less each year.
The tax credit will be granted if the following conditions are met during the previous tax year:
- The property was not transferred to new ownership.
- There was no change in the zoning classification requested by the homeowner resulting in an increase value of the property.
- A substantial change did not occur in the use of the property.
- The previous assessment was not clearly erroneous.
- A further condition is that the dwelling must be the owner’s principal residence and the owner must have lived in it for at least six months of the year, including July 1 of the year for which the credit is applicable, unless the owner was temporarily unable to do so by reason of illness or need of special care. An owner can receive a credit only on one property---the principal residence.
- Razed Dwelling and Vacated Dwelling for Making Substantial Improvements
- Property owners who choose to vacate their principal residence to raze the dwelling in order to replace it with a new home on the subject property or to make substantial improvements to the property can continue to receive Homestead Tax Credit eligibility provided two conditions are met. First, the homeowner(s) must have owned and occupied the property as a principal residence for at least 3 full tax years immediately preceding the razing or the commencement of the substantial improvements. Second, the building of the replacement home or making the substantial improvements must be completed within the next succeeding tax year after the tax year in which the razing or the substantial improvements were commenced.
How do you apply?
All homeowners must submit a one-time application to establish eligibility for the credit. You can download or submit an online application HERE.
For more information, please visit the Maryland Department of Assessments and Taxation webpage.