The Maryland Homestead Tax Credit is available to homeowners in the state of Maryland, and it can save you money by offsetting some of the costs of property taxes.
What is the Maryland Homestead Tax Credit
In order to help Maryland homeowners manage large assessment increases on their principle residence, the state has established the Maryland Homestead Tax Credit. This credit limits the increase in taxable assessments to 10% or less each year and applies to every county and municipality.
It’s important to note that the Homestead Credit does not limit the market value of the property, which is not directly correlated to the assessed value as determined by the Department of Assessments and Taxation. The market value of a home is what someone is willing to pay for it. The state-assessed value of a home is what the government thinks it is worth. In Maryland, there are over 2.3 million real property accounts. The Department of Assessments and Taxation must appraise each of these properties once every three years.
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).
Do I qualify for the Maryland Homestead Tax Credit
The Homestead Credit is only available to homeowners with a principle residence in Maryland. Meaning, the owner must have lived in the property for at least six months of the year, and you must have owned the property for one year before applying. The tax credit will be granted if all of the conditions are met during the previous tax year.
To prevent improper granting of this credit on rented or multiple properties of a single owner, a law was enacted in 2007 that requires all homeowners to submit a one-time application to establish eligibility for the credit. Find the status of your Homestead eligibility by looking up your property on the Real Property database before you apply. The status will be located at the bottom of the search results page.
How do I apply for the Maryland Homestead Tax Credit
There are currently two ways to apply for the Homestead Credit. At the settlement of your home purchase, you should have been presented with the paper application, which can be completed and mailed to the Maryland State Department of Assessments & Taxation.
This form will require you to look up and provide the tax identification number (account number), property address, names and social security numbers of the owners.
The second option is to complete the application online. This certainly seems like the easier route to go, but there is one extra step that could change your mind. When applying online, you need to include an access number. I’m assuming this is created by the state department automatically when you mail in your application. However, to obtain one before proceeding online, you need to manually send an email to sdat.homestead@maryland.gov.
When I tried this, an automatic email acknowledging receipt was received instantly. However, it too the representative 48 days to respond with the required 8-digit code that I needed to complete the application. Once I had the code, the process was simple, and I was taken through three screens that mirrored the paper application. They asked the same five questions, names and socials of the owners, and account number.
Once your Maryland Homestead Tax Credit application is submitted, you can check the status by looking up your property on the Real Property database. The status will be located at the bottom of the search results page where it says “Homestead Application Status.” For questions about the Homestead Tax Credit, you may call 410-767-2165 or email sdat.homestead@maryland.gov.