Double-, triple-dipping on the homestead credit
The homestead credit is a no-second-helpings deal in Maryland: You can get the tax break on only one home, your principal residence. That's true for married couples, too -- just one credit.
Julie Scharper and I reported that Mayor Stephanie Rawlings-Blake and her husband collected homestead tax credits on two separate properties before she stepped up to the city's top job. Kent Blake, her husband, repaid seven years' worth of credits between January and May 2010 on a Columbia house he owns. A spokesman for the mayor said the repayments were made "without any prompting."
Clerk of Circuit Court Frank M. Conaway Sr., one of Rawlings-Blake's challengers in the mayoral primary, has been collecting homestead credits on two properties while his wife benefits from a third.
He said he didn't realize that he had been receiving the tax break on a rental property in addition to the one for his home, adding that he would pay that money back. But he declined to comment when he was asked why his wife -- the city's register of wills -- also is receiving a credit on a city property she owns.
Blogger Adam Meister has written about the Conaways' homestead credits, a fact that escaped me until after I did a deep dive into all the major mayoral candidates' property records and found problems. (I'm the opposite of a political junkie, so I hardly ever read politics blogs. Hey, I can't be a wonk in everything.)
What's probably best known about Meister's blogging: his posts about Frank Conaway's daughter, Belinda Conaway. The city councilwoman filed and then dropped a libel suit against Meister for writing that she had indicated in a document filed in the land records that a Baltimore County property she owns is her principal residence. That home also received a homestead credit. (Belinda Conaway's attorney said the document had been signed in error.)
Homestead credit double-dipping has cropped up a lot over the years, sometimes by property owners who -- for reasons explained in today's story -- don't realize they're doing it. Triple-dips, even quadruple-dips, happen, too.
A 2007 law designed to put an end to unwarranted homestead breaks specified for the first time that owners must apply for the credit, a requirement that is being phased in. New buyers must submit their information, including a Social Security number, to state assessors. Owners who bought before 2008 have until the end of next year to follow suit.
If a Social Security number is associated with more than one property for purposes of the homestead credit, that's a red flag to assessors to follow up with the owner. And because the IRS links spouses' Social Security numbers, staffers will know if there's any husband-and-wife double dipping on credits, according to Robert E. Young, director of the state Department of Assessments and Taxation.
Those checks and balances won't be fully functional until the application deadline for longer-term owners has passed, of course. That's 16 months away.
Categories: Homestead Property Tax Credit, Property taxes
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Comments
Politicians lying, cheating and stealing? I am shocked, shocked I tell ya!
Posted by: terpfan | August 31, 2011 6:55 AM
how do you change your primary residence status if you move out of a house? is there a form to fill out or do you have to wait in line somewhere?
Posted by: avoiding the near occasion of sin | August 31, 2011 7:56 AM
Frank M. Conaway Sr. is a horrible lier... How do you not know your getting a tax credit on 2 of your properties?? At least the Mayor paid back her money before she was in office... Frank would of tried to get away with it for sure.
Posted by: Luke | August 31, 2011 8:22 AM
So where is SDAT? Why isn't SDAT Director Robert Young have an employee auditing the state land records and Homestead records to find these cheats? Too expensive? I doubt it. No political will to discover more politicians or connected businesses, that I'd buy.
Posted by: Paul | August 31, 2011 8:54 AM
To: avoiding the near occasion of sin
You can change your principal residence status by completing the homestead credit form and checking "no" in the appropriate boxes. The form is here:
http://www.dat.state.md.us/sdatweb/Homestead_application.pdf
Posted by: Louis Wilen | August 31, 2011 11:20 AM
Thanks, Louis!
SDAT accepts written correspondence from owners who want to report themselves -- "I just realized I'm getting a credit and I want it taken away" -- so that should also work for anyone who wants to nip the problem in the bud before it starts. Letters should go to the local assessment office. List here: http://www.dat.state.md.us/sdatweb/county.html
Posted by: Jamie Smith Hopkins | August 31, 2011 11:26 AM
Solving this problem is simple. All they have to do is impose a heavy fine, how about $5,000 to $10,000 per year for double dipping when caught. They should have the ability to put an automatic lien on the property so it can accrue interest. Set the interest rate to highest statutory rate possible, 20% just like the tax sale liens. Watch how quick homeowners would be to get their records straight then. Of course, anything that makes sense to the common person doesn't happen in reality with the government.
Posted by: Jack Daniels | August 31, 2011 12:01 PM
Shame on you !!!! You took away from people who can't get it as residents of the property. Yes assessments came in lower and I a city resident and did not quilfy for the tax credit due to a lower assessment of my home and you take two or three. You all say you want to help the citzens of Baltimore and you are taking more from us.
Posted by: veronica | August 31, 2011 3:43 PM
B Conaway getting a homestead credit for her Randallstown property is no mystery. She is defrauding the voters by living in another jurisdiction while maintaining an address for political purposes in the City. When she signed for the mortgage she had to indicate if the house was a primary residence. No loan approval or higher down payment requirements would be the result of its not being a primary residence. From what I see she is not the only one doing this. If the voters are stupid enough to elect dishonest people..........
I agree there should be a fine for this sort of chicanery or just flatten the tax rate and eliminate the program.
As for vacants, there should be a tax surcharge and prompt condemnation if after a statutory period there is no renovation activity, ie. building permits.
Posted by: Bob Kean | August 31, 2011 5:55 PM
Hi, veronica -- if your assessed value dropped so much you have no homestead credit now, that's actually good news for you. Remember that the credit works like a cap: It prevents the amount of assessment you're actually taxed on from going up more than a certain percentage (4 percent in the city).
So, depending on the value of your new assessment, you should now be seeing either an increase of less than 4 percent, no change or an actual drop in your tax bill.
Posted by: Jamie Smith Hopkins | August 31, 2011 6:01 PM
Reduce city property taxes to rates equivalent to the counties, and then enforce the residential exemption provisions. City rates are so high--it forces owners to claim these exemptions, even if they are skirting a fine line.
Posted by: srm33761 | August 31, 2011 7:22 PM
srm33761, the high tax rate isn't causing people to cheat on the homestead credit. Montgomery County's tax rate is a fraction of Baltimore's, yet thousands of cheats have been exposed there as well. Until there are real consequences for cheating, such as fines, interest, and criminal penalties, people will continue to cheat on the homestead credit.
Posted by: MCG | August 31, 2011 9:44 PM
Hi Jamie,
I have been so busy and out of the loop. How do I find out if I am receiving the homestead tax credit?
Also, I am still enjoying the crash. 1999 prices, as predicted, on the horizon.....
DR
Posted by: Darwin Rules | September 1, 2011 11:26 PM
Hi, DR -- I wondered where you were! You can find out about the homestead credit in several ways. It should appear on your property-tax bill, the one mailed out around July 1. It would also be noted on your last reassessment notice, whenever that was (it's a three-year cycle). Also, you can go online to SDAT's real property search and look up your address to see if it's listed as a principal residence: http://sdatcert3.resiusa.org/rp_rewrite/
Even if you're receiving no monetary benefit from the credit now, you'd be on file as eligible for it if your property is listed as a principal residence. So you would want want to know that.
Finally, if you can't find the property tax bill that was sent to you: Your jurisdiction might have property-tax bills online. Here's the link for Baltimore: http://cityservices.baltimorecity.gov/realproperty/
Posted by: Jamie Smith Hopkins | September 2, 2011 7:35 AM
Why doesn't anyone consider the basic premise of PROPERTY TAXES.....I do not believe they should exist. Once a property is purchased it should be owned completely, not having a government lien against it to be paid each year. If the fee for services that come from the county were distributed fairly, everyone benefiting would pay equally via another method such as a flat tax. Currently, property owners foot the bill for schools, fire protection, etc that all residents including renters benefit from. It is an unfair burden that should be done away with.
Posted by: Anonymous | September 10, 2011 6:13 PM