An outsider perspective on Md. property-tax rules
Wonk reader Jim, a Boston resident who bought a home in Baltimore recently for visiting his daughter on weekends, got a taste of the "bewildering" Maryland property-tax rules as he was searching for a place.
Here's what struck him:
--It's not always apparent to buyers how much they'll be paying in taxes. He found that many listings had incorrect tax amounts, either calculated on the wrong year of the three-year phase-in or noting the seller's (lower) tax burden thanks to his or her Homestead tax credit.
--The Homestead credit, which caps increases in taxable assessments for owner-occupants, is probably a key reason relatively few people appeal. Someone being taxed on $150,000 of a $300,000 assessment in Baltimore won't get a lower bill if they successfully argue that the true value is just $200,000.
"What I found out pretty quickly was that a lot of people do not contest their assessment, which leads to a poor system," he wrote me. "Why would someone who is covered under the Homestead rule contest a high assessment? They probably like a high assessment because it doesn't cost them anything and it makes it seem like their property is worth more."
--That high assessment that's not bothering you, Mr. or Ms. Home Seller? Remember that your buyers will be stuck with the full tab.
--Not that this will surprise any locals, but city property-tax rate: Ouch.
"In Boston, which is a high cost city, especially in real estate, property taxes run approximately 1% of a home's actual market value, so Baltimore's taxes really shocked me," Jim notes. "To pay $400,000 for a condominium and pay $12,000 in taxes is unreal. On my primary residence in Boston, valued at $1.1 million for taxes, I pay about $10k in taxes with the local homeowner exclusions."
(On a side note, this much-discussed analysis of Baltimore's tax rate has comparisons to Boston. Stay tuned for a Q&A with one of the authors.)
Anyone move to Maryland after owning a home elsewhere? What do you think of the assessment and taxation setup?