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August 10, 2009

Unearned property tax credits

Matt Gonter, Baltimore resident and Wonk reader, doesn't like it when people wrongly get the benefit of the homestead property tax credit. It irritates him that absentee landlords on record as owner-occupiers are paying less in taxes than they ought to be, especially because he suspects the city's high tax rate could be lowered if no one was cheating.

It irritates him so much that he's spent his free time researching online to see which owners of rented or vacant properties are reaping tax breaks for supposedly living there.

I wrote about his crusade last year. Now he has an update: He says he's finished checking out homes listed as vacant by Baltimore City and has found 1,148 that are on record with the state as principal residences. That means their owners could be collecting the homestead credit.

"I believe that this type of cheating runs rampant across the state," he told me, noting that a Montgomery County resident had similar results with a project there.

Gonter said he's still finding homes on a daily basis that are both officially listed as owner-occupied and advertised for rent.

The homestead credit caps property tax increases for owner-occupiers. In Baltimore, the limit is 4 percent a year. The value of the tax break ballooned along with home prices earlier in the decade -- last year it was worth $1 billion to homeowners statewide.

The Maryland General Assembly, concerned about people collecting homestead credits on several homes at once, passed a law in 2007 requiring all homeowners to apply for the credit with their Social Security number -- giving the state a simple way to check if double-dipping is afoot. But the deadline isn't until 2012 for everyone who bought in or before 2007.

Perhaps that's why Gonter keeps finding addresses to add to his list. "The state ought to hire some researchers to look up vacant and rental properties throughout the state," he said.

As it happens, Baltimore ran an audit last year on homes registered as rentals, said Helene Grady, the city's deputy finance director. "We got a number of hits," she said.

The city did a separate check recently to see who's collecting special property tax credits requiring residency -- like the one for new construction -- even though they don't seem to be living in the homes. A few dozen owners will be getting letters soon, asking for documentation that they do indeed live there, Grady said. If they can't prove it or don't respond, they'll get revised tax bills.

While the homestead credit can add up to a lot over time, the city's new-construction credit is valuable immediately. It cuts an owner's tax bill in half the first year and a significant but lesser amount the following four years.

"As we have more and more of these properties getting the credit, we realized we needed to tighten up procedures," Grady said.

I'm sure you have thoughts -- you always do when the subject is property taxes. So weigh in.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (11)
Categories: Homestead Property Tax Credit, Property taxes


PLEASE, Baltimore: Hire Matt Gonter to do this full-time for you. He's the guy for the job! It's a no-lose situation. He'll help run the slumlords out of town, and maybe even get the property taxes lowered for those of us who live in the city...

Grant... but if the City (or Countyor State ftm) were to suddenly have actually accurate information used in one area it is likely to completely throw off the other assumption and error based data used in the rest of their budgets.

There are real people with real jobs to be protected here. Watch them... it could really be entertaining if it weren't so tragic.

Maybe the city really should hire someone to do this full time. I mean, it sounds like a profitable venture for the city, and Baltimore could use the money.

How about just getting rid of the homestead property tax credit all together?

I applaud Mr. Gonter for taking the time to do this. He is a super hero. Not to mention, any massive fan of the Baltimore Ravens is a fan in my book!!

Kudos to Matt Gonter for his tenacious efforts on behalf of Baltimore and its honest tax-paying property owners. The most infuriating thing is that so many of those taking advantage of the homesteader credit are suburb-dwelling, absentee owners who parasitize--and vilify--our ravaged city, growing fat with profits as they suck the place dry. Hey suburban parasites, I pay my taxes, now you pay yours. Come on, Baltimore City: defend yourself and give us honest folks a break. Matt has demonstrated one great way to do this.

How do we get in touch with Gonter to let him know about fraudulent info and is the State reviewing his results and adjusting the tax appropriately (and gathering back taxes if possible)?

Patrick, I'll pass your email address onto him. And yes, the state has been making use of his research.

The taxes are too damn high, period. People would probably be alot more honest if this poorly run city wasn't trying to charge $9000 a year in property taxes for a freaking rowhouse. That's $800 a month BEFORE you even add in the mortgage or insurance.

No question the taxes are high in the city. They always have been and they always will be.

The question is whether you get the value of that money in return..
quality schools?
fire and ambulance?
trash collection?

Are the ambiance of a few quirky neighborhoods enough to counter balance all the rest for you?


Cheating is just as rampant in Montgomery County- whose base rate ($0.683) is equal to less than 1/3 of Baltimore City's rate ($2.268), so your argument that people would be more honest if the tax rate was lower does not hold true. Absentee owners will most likely cheat if they are certain that they can get away with it and not face any real consequences if they are caught.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie

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