Truth in (property tax) advertising
You may have run into this before: real estate ads trumpeting property-tax bills that aren't anywhere near what you -- the prospective buyer -- would pay, because they're what the seller is paying after years of homestead-credit protection.
Maryland's tax break for owner-occupants keeps the property tax bill from rising more than a certain amount each year. In Baltimore, for instance, the homestead cap is 4 percent. But the credit doesn't transfer from one owner to the next, so a new buyer will get a bill that reflects the full assessment.
This can be a nasty shock if you didn't realize it and weren't budgeting for it.
As Julie Bykowicz reports, city real estate ads will have to take that into account in about three months. That's when a new ordinance goes into effect to put the kibosh on "misleadingly low figures." (We could call it the "read my lips: no old taxes" rule.)
The ordinance, the story says, requires that "tax figures in ads must be a reflection of the property's most recent assessment multiplied by the city property tax rate of $2.268 per $100 of assessed value."
What do you think of that?
Comments
I think having tax information as part of a real estate listing is useful. What could be done instead of the current method is take the assessed value (available form the state) and just use math to calculate the real taxes a buyer could expect if the purchased the property.
Posted by: Paul | May 19, 2009 9:51 AM
Yup, Paul, that's what the new ordinance requires. (Second to last paragraph of the post.)
Posted by: Jamie Smith Hopkins | May 19, 2009 10:01 AM
I live in Howard county but the problem is the same here. Ads will list taxes paid in 2007 but not say that the owner has been in the house for 20 years. In my case, when I sell the new owner will pay about $2400 more than I do in RE taxes and CPRA and the difference increases every year. That is $200 per month and enough to really stretch a tight budget.
Posted by: carolb | May 20, 2009 11:04 AM
In my case, the advertised tax rate on the house I bought 4 years ago was pretty close to what I paid the first year,,, problem was that by the second year I owned it, the new property assessments, reflecting housing bubble prices were done, which made the tax nearly double.
Posted by: lisa | May 22, 2009 12:12 PM
Thanks for this great info!
Question:
If I buy a Baltimore City home that is assessed at 100k for a purchase price of 200k, and the home was just assessed (11/08, at 100k) so is not due for re-assessment for 2 more years, will they reassess as soon as I buy the home? Or, will the 100k assessment hold until next 3-year assessment is due, and by then I'll be protected and can apply for homestead credit? Is there any way I can fight for the previous assessment of 100k? Thanks!
Posted by: Wick | August 7, 2009 12:17 AM
Hi, Wick -- I know some people have seen out-of-cycle reassessments, but I think they've generally been done because the home was rehabbed, added on to, etc. But I've put in a call to the state to check.
By the way, you'll want to apply for the homestead credit as soon as you buy, even though it won't kick in for a full fiscal year.
Posted by: Jamie Smith Hopkins | August 7, 2009 9:29 AM
Got an answer for you, Wick. Look for a post about it on the blog Saturday morning.
Posted by: Jamie Smith Hopkins | August 7, 2009 10:15 PM