A reader wrote in the other day because she discovered that her former neighbor's house, foreclosed on several years ago, is still listed in public records as if he owns it and lives there. She wondered whether the foreclosing bank has been reaping property tax breaks all this time because the home is on the books as owner-occupied.

This is not an unusual problem. State officials say mortgage servicers are taking months, sometimes years, to take title to foreclosed property, leaving it in a sort of limbo that makes it difficult for neighbors and officials to determine who's actually responsible for the property.

But I don't think anyone knows just how many times this has happened -- or how much money local jurisdictions have lost as a result of Homestead Property Tax Credits doled out after the homeowner who qualified became a former homeowner. The state Department of Assessments and Taxation relies on title transfers to strip the credits from properties.

State Sen. Richard F. Colburn, an Eastern Shore Republican, tried last year to require deed recordation within 60 days after a foreclosure is ratified by the court, but the bill died in committee.

Now legislation before the Senate judicial proceedings committee would give the assessments agency another way to figure out which homes aren't homestead-eligible because they've been foreclosed on.

Continue reading "Proposal would help state keep banks from getting homeowner tax breaks" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (3)
Categories: Property taxes, The foreclosure mess
        

If your home or other Maryland property was recently reassessed, your deadline to appeal is fast approaching.

Paperwork must be in by Feb. 10 for the one-third of property owners whose reassessment notices were mailed in late December. The state Department of Assessments and Taxation lays out a brief how-to here, noting that you can request your assessment worksheet to check it for accuracy and suggesting you find sales of comparable properties to make your case for a different valuation. (Here's the state's property look-up site, which gives you an option to search for sales.)

If you weren't just reassessed but are buying a home in the first six months of this year, you too can appeal to try to change the bill you'll get in July. That's called an "appeal upon purchase," and you have 60 days to file after settlement.

It's too late to appeal for the upcoming tax year if you aren't in one of those two groups. You can send in a "petition for review" anytime between now and Jan. 1 (or the first business day after Jan. 1, generally), but it won't have a chance of affecting your bill until July 1, 2013.

But some Baltimore homeowners might get a lowered bill this July without appealing -- because someone else did it for them.

Rockville-based Property Tax Pros, which offers an online appeal service for owners of houses, townhouses and rowhouses in large Maryland jurisdictions, filed pro-bono, out-of-the-blue appeals of 100 city homes' property assessments in January.

Larry Giammo, the company's co-founder and a former Rockville mayor, said he and his team picked modest homes -- assessed at about $70,000 to $120,000 -- that they believe are far overvalued now, about a year after they were last assessed. (Each property in the state is reassessed once every three years.)

Continue reading "Deadline to appeal new property assessments: Feb. 10" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (6)
Categories: Property taxes
        

City Councilman Carl Stokes' proposal last year to cut the city's property-tax rate in half didn't get anywhere, but he's trying again now. And he said he'll likely launch a signature drive to get the measure on the ballot in November if the rest of the City Council remains opposed to the idea.

Scott Calvert has more in this story, the crux of which is that Stokes wants a charter amendment voted up or down by city residents -- whether the council puts it on the ballot or citizens do. He said he would need 10,000 signatures by May 31 if he goes the petition route.

Like last year, Stokes is pairing the plan to reduce the city's rate from 2.268 percent to 1.1 percent with a proposal to temporarily raise the cap on homeowners' annual increases in property assessments.

The Homestead Property Tax Credit now limits increases on city homeowners to 4 percent a year. Stokes would increase that ceiling to 6 percent, then 8 percent and finally the state maximum of 10 percent, holding it there for five years before dropping it back down to 4 percent. (More on that in a bit.)

Also like last year, Mayor Stephanie Rawlings-Blake's administration is saying this change would not be a good idea. The major sticking point is whether a dramatic drop in the city's rate would bring in enough new residents and businesses to avoid cataclysmic cuts to services. You could see why this possibility might keep officials up at night. (The city's finance department said last year that Baltimore would need more than 500,000 new residents to make up for the revenue loss of a 1.1 percent rate, though some lower-rate proponents contended that this overstated things.)

And in the same category of everything old is new again, the owners of the Tremont Plaza Hotel in Baltimore are planning to bring it mostly full circle. William C. Smith + Co. converted the building from apartments to a hotel in the early 1980s and is now proposing to use it as apartments and long-term-stay suites.

Continue reading "Stokes tries again on property taxes, the Tremont tries again with apartments" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (2)
Categories: Property taxes, Renting
        

The typical owner in Baltimore paid a bit over $1,800 in property taxes for the current tax year. Get 190 of them in one room, and together their tab just equals Tom Clancy's.

That's by way of putting the bestselling author's nearly $350,000 bill into perspective, which is of course on a not-at-all-typical property. He owns about 17,000 square feet at the Ritz-Carlton Residences alongside the Inner Harbor.

You can see all 10 of the homes with the biggest bills -- and the top 10 commercial properties as well -- in this photo gallery, if you didn't already check it out over the weekend. (Thanks to editors Liz Pillow and Justine Maki and photographers Kim Hairston and Barbara Haddock Taylor for their work on this time-consuming effort.)

Here's the story that Scott Calvert and I wrote, which includes an interesting discussion with the trustees for the No. 2 home. (We've got a separate gallery just for that expansive place -- thanks once again to Liz, not to mention photographer Amy Davis.)

And the Sun's Adam Marton put together two interactive maps: one for the homes and another for the commercial properties. It's interesting to see how closely most of them are clustered. (Click on the icons for details about each property.)

Our analysis ranked individual properties rather than property owners. It would be pretty interesting to know who has the biggest collective tax bill, accounting for multiple properties, but that's tricky to get at for the same reason that it's not easy to say which private owners have the most vacant homes. A single person or firm might hold a dozen properties in a dozen separate limited liability companies.

Continue reading "Baltimore's biggest property-tax bills" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (1)
Categories: Property taxes, Unusual homes
        

If you think your property assessment is wrong (and you're not among the one-third of owners who were just reassessed), you'd better get a move on. The deadline to appeal is Jan. 3 -- Tuesday.

Some homeowners are inevitably surprised to hear they can appeal on off-years. But yes, you can appeal every year, not just the one-in-three when assessors revalue your home.

Notices just went out this week for those who have been reassessed this year, and those property owners have until Feb. 10 to decide whether to fight. For everyone else, the clock is rapidly ticking down.

This out-of-cycle appeal is called a "petition for review." Home sale prices haven't stopped their downward trend, so you probably can make a strong case that your value is lower now -- especially if you were last reassessed two years ago. Like any property appeal, you want to arm yourself with sales data showing what people have paid for comparable properties.

Beware of relying on short sales and foreclosures unless they're a substantial part of the market near you. The state Department of Assessments and Taxation says it wants to see "arm's length" transactions in which banks played no role beyond financier, so you'll have to make the case that distress sales are driving your local market if you want the agency to lower your assessment with foreclosures and short sales in mind.

Continue reading "Get your property-assessment appeal in by Tuesday" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (0)
Categories: Homestead Property Tax Credit, Property taxes
        

A third of property owners in the state are about to get notices outlining their new assessments. If you're among the 631,000 homeowners in that group, chances are good that your assessed value is down.

Assessments for residential properties dropped an average of 17 percent statewide compared with the last time they were revalued in late 2008, the state Department of Assessments and Taxation says. About 90 percent of homes saw a decline.

More details in today's story.

Not sure whether you were due for reassessment? Check out these maps. 

Thinking of appealing? Your deadline is Feb. 10 if you've just been reassessed; you'll get paperwork with your notice that you can mail back in.

If you're among the two-thirds of property owners who haven't just been reassessed, you can still appeal -- it's called a "petition for review" -- but your deadline is Jan. 3. (That's because it's the first business day after Jan. 1. Assessments chief Robert E. Young says the office will accept petitions delivered, emailed or postmarked that day.)

Continue reading "Property reassesments: 17% drop in Md. home values since '08" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (3)
Categories: Property taxes
        

So many questions came in during our live-chat Q&A about the homestead credit last week that we couldn't get to them all, but I didn't want to leave people hanging. Ditto with folks who emailed questions to Midday with Dan Rodricks at WYPR that didn't get asked on air.

So here they are, with my best effort at answers.

Two people touched on a similar theme. Margaret from Baltimore asks: "What would prevent thousands of families from fleeing the city to the counties which not only have lower tax rates but also will continue to offer the homestead cap that protects homeowners?"

And Amir from Baltimore says: "These stories are great. I'm a renter and want to find the right place to maybe buy in the city. If Baltimore residents are stripped of the Homestead credit – what incentive is there to move and live for many years?"

I don't think the homestead credit would disappear in the city and remain in the rest of the state. A successful court challenge, for instance, would undo the law statewide. I doubt the General Assembly would get rid of the program on its own -- alterations are more likely -- but there too the homestead credit would probably be dealt with on a statewide basis.

Quick reminder: The homestead program caps any increases in the amount of assessed value a homeowner is actually taxed on at 10 percent statewide, allowing jurisdictions to set their own caps lower. Baltimore's is 4 percent, like Baltimore County's. Carroll, Harford and Howard counties are at 5 percent. Anne Arundel is at 2 percent.

Some counties and cities are at 10 percent -- Annapolis, Sykesville and Montgomery County, to name a few -- but most are outside the Baltimore region. So while Baltimore could raise its cap to 10 percent, it has generally been proposed as part of a plan to decrease the city's overall property-tax rate in order to increase population. Here, for instance, is a 2007 proposal from a city blue-ribbon committee that recommends such a move.

Continue reading "Homestead credit Q&A" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (0)
Categories: Homestead Property Tax Credit, Property taxes, Q&A
        

Readers have been sending in ideas for how to change the Homestead Property Tax Credit, replace it or, alternatively, how to change the entire property-tax system. It's been interesting to see, and I didn't want to keep them all to myself.

Some have come in as questions.

"It looks like we have 2 tax credits for homeowners, both designed to protect them against financial shocks from tax spikes: the Homestead Tax Credit, which you've been covering so well, and the Homeowners' Property Tax Credit, which is incapable of being enjoyed by upper income homeowners because it has an income eligibility cut-off," Steve R. wrote during the homestead Q&A this week. "Couldn't we solve the inequities you found and still maintain protections for middle class homeowners (and incentives for them to stay in their city homes) by scrapping the Homestead Tax Credit and strengthening the Homeowners' Property Tax Credit?"

Del. Sandy Rosenberg's suggestion, which we covered earlier in the week, is to keep the homestead program but inject an income element into it so that the annual cap on taxes would vary based on how much a household makes. You could still end up with people in similar homes paying very different amounts of taxes under that model, but those differences would be based on income as well as when the homeowners bought rather than just the latter.

I'll circle back to that proposal -- and reaction to it -- in a bit. (Also: Allegations of class warfare!)

A quick primer on the homestead credit: It sets a limit on how fast the amount of assessed value you're actually taxed on can increase each year. The statewide maximum is 10 percent; many jurisdictions have set their caps lower. Baltimore's limit is 4 percent. Every homeowner is eligible -- it's a tax break for owner-occupiers.

While some reader proposals focus on the homestead program, by itself or as part of an effort to decrease the city's property-tax rate, others say all the attention should be focused on the rate. It's the highest by far in Maryland (though one reader says the difference isn't quite as bad as it appears -- some counties' effective rates are higher than advertised because they add on a lot of extra charges, he says). 

Reader David Meltzer writes, "The only message that an advocate of Baltimore should be sending is that Baltimore property taxes must be HALVED in order to cure its problems. Why foster infighting among us?"

Continue reading "From different limits to 'land tax,' your fix for the homestead credit " »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (14)
Categories: Homestead Property Tax Credit, Property taxes
        

Got questions about the state's Homestead Property Tax Credit or the Sun's investigation into how it works and doesn't work?

Ask them here. We'll have a live Q&A at noon today, but you can type up your question (or questions) beforehand, too. 

On a related note: You've been commenting, tweeting and emailing various thoughts about how the homestead credit -- and the city's property-tax system overall -- could be fairer and/or better. I'm going to pull them together for a post this week (I'd hoped to do it in time for this morning but other stories interfered, including this one about a lawsuit against the Creig Northrop Team), so there's still an opportunity to pipe up.

Thanks for all the ideas! Interesting discussion.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (7)
Categories: Homestead Property Tax Credit, Property taxes, Q&A
        

Homeowners on a stretch of Roundhouse Court in Pigtown are paying between $2,400 and $5,700 in property taxes this year.

The tax bill on one rowhome on Churchill Street in Federal Hill is $3,900, while directly across the street it's $6,500.

And on Bank Street in Upper Fells Point, you can find homeowners paying $2,900, $4,400 and $6,500, all within about a block of each other.

In each example, the neighbors' home values are basically the same. The reason their bills are not is that the Homestead Property Tax Credit caps homeowners' increases at 4 percent a year in Baltimore.

That limit has left many paying on far less than their full assessment, even with the housing bust that followed boom. Those who bought over the last several years, by contrast, have generally had no increases to cap, so they're paying full freight. You can find homestead-fueled tax-bill disparities across the state, but they're particularly notable in Baltimore thanks to its highest-in-Maryland property-tax rate.

The upside to such a cap is that it protects homeowners from skyrocketing bills. The downside is that it shifts more of the tax burden onto newer buyers and renters. (Landlords don't qualify for the break, and they pass their costs along via the rent.)

Scott Calvert and I spent several months delving into the homestead program and were amazed at what we found.

Did you know the value to recipients (and cost to the city) is $120 million this year alone? Or that the attorney general's office has for years opined that the program violates Maryland's constitution? And that hundreds of city property owners are getting credits that were inflated by mistakes or that they shouldn't be receiving at all?

Continue reading "Next door, vastly different property-tax bills" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (14)
Categories: Homestead Property Tax Credit, Property taxes
        

The state's homestead credit, a tax break designed to cap annual property-tax increases for homeowners, doesn't usually pass from one owner to the next. If Joe Schmoe buys a home from John Q. Public, Schmoe doesn't get Public's credit, other than for the rest of the tax year in which the purchased happened.

Turns out there is an exception, though. If the owner dies, his or her heirs inherit the credit as well as the house as long as they make it their primary residence.

Why? Because the typical condition for a change in the homestead situation is a "transfer for consideration" -- a sale involving money. Inheriting is not a transfer for consideration, says Robert E. Young, director of the state Department of Assessments and Taxation. So the homestead credit calculation continues on as if there were no change in ownership.

"If ... you are receiving a homestead on another property, then you're not entitled to keep it," Young added. (Homeowners can receive a homestead credit on only one property, their primary residence.)

The inheritance quirk of the homestead law came up when I was looking into claims made about a Baltimore City Council candidate, which just reminded me that however much I think I know about property taxes, there's a never-ending supply of additional information out there.

The homestead program caps annual increases in owner-occupiers' taxable assessments to varying degrees across the state. In Baltimore and Baltimore County, it's 4 percent a year. Even with the drop in home values over the last several years, some homeowners' credits are sizable -- especially people who've lived in their homes for many years. So Junior could really benefit financially from inheriting a parent's homestead credit.

Some homeowners have been surprised by another homestead-credit exception: If you make more than $100,000 in improvements to your property, you get taxed on the full amount of those improvements. This quirk has caught up several years late to some homeowners who simply bought a newly rehabbed property, and it changed their bills in a big way. More on that here.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (5)
Categories: Homestead Property Tax Credit, Property taxes
        

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.

Read the full story here.

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.

Continue reading "Double-, triple-dipping on the homestead credit" »

Posted by Jamie Smith Hopkins at 12:01 AM | Permalink | Comments (15)
Categories: Homestead Property Tax Credit, Property taxes
        

The point of the homestead tax credit is to keep Maryland owner-occupiers from seeing their property-tax bills skyrocket. Nobody else is supposed to get the benefit of that tax break, but it's going to the owners of 465 homes cited by the city as vacant.

The analysis was simple: Colleague Scott Calvert and I compared the city's list of homes with vacant building notices against its list of properties with homestead credits. Total amount of city homestead credits to homes listed as vacant: $325,000.

The city sends its list of registered rentals to the state Department of Assessments and Taxation twice a year so it can be cross-checked for homestead recipients. But it hasn't been sending the vacants list and asking for the same analysis. 

After we reported this on Tuesday, the city Finance Department said it would be sending that list to the state assessors by the end of the afternoon. Challengers to Mayor Stephanie Rawlings-Blake, meanwhile, issued strongly worded tsk-tsks. The follow-up story is here.

In related tax-credit news (same story): Mayoral candidate Frank M. Conaway Sr. is receiving homestead breaks on two properties, a rental home as well as his own home. He said Tuesday that he had no idea he was getting the credit on the rental, and he notified the assessment department by email.

"I tried to pay it today, but they wouldn't let me," Conaway said. "Nobody wanted to take the money."

Loyal readers will recall that city resident Matt Gonter has spent years tracking down and reporting owners of properties with unwarranted homestead credits. Here's the 2008 story about his one-man effort and a 2009 update.

He's been prodding the city to do more on its own. Last month, the Finance Department launched a "billing integrity program" designed to catch tax cheats and those unwittingly getting breaks they shouldn't be receiving.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (8)
Categories: Homestead Property Tax Credit, Property taxes
        

Colleague Julie Scharper wrote this weekend about mayoral candidates' dueling plans on property-tax relief in Baltimore, a story that includes the perspectives of several residents who moved out recently or are in the process of doing so.

"I'm part of the thirtysomething generation that wanted to live in the city," said one of the folks she quoted, a 31-year-old whose family bought a home in Anne Arundel County last month. "But every single place we looked at that was in our price range, the property taxes were $5,000 to $6,000."

This is the sort of experience that residents, and real estate agents, have bemoaned for years. Alas, I know of no research that's attempted to get at just how common this is -- moving out, or deciding not to move in, because of the city's property-tax structure. (The city's rate is more than twice as high as the rest of the jurisdictions in the state.)

So weigh in on the (admittedly unscientific) poll below. It's a choose-all-that-apply, so pick as many of the answers below as you agree with:

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (13)
Categories: Property taxes
        

The newest property-tax proposal in Baltimore's interesting mayoral race is the mayor's. Stephanie Rawlings-Blake is set to announce that she will seek a 9 percent cut in the city's property-tax rate for homeowners, phased in through 2020, the Sun's Julie Scharper reports.

That's much smaller than the 30 to 50 percent cuts supported by challengers, a reduction the mayor and her finance department have called unrealistic. Another difference: The reduction would apply only to owner-occupied homes, not rental properties, vacant homes or commercial buildings.

The city's 2.268 percent rate is more than twice as much as the rest of the state. Rawlings-Blake says dropping that to 2.068 percent by 2020 is doable, and she proposes to plug half the revenue hole with almost all the money the city expects to get from slots. (The slots project has been held up for a while now, with lawsuits from the developer the city cut loose. New bids to build a Baltimore casino could come in next week, the state says.)

Savings to an owner-occupier if the tax-cut plan goes forward: about $400 a year on a $200,000 property, once the reduction is fully phased in. If you qualify for the homestead tax credit, you'd automatically get the rate reduction. (Remember that "qualify" isn't the same as actually receiving a credit amount, so presumably owner-occupiers with $0 credits wouldn't have a problem getting the new rate.)

Thoughts?

Posted by Jamie Smith Hopkins at 10:23 AM | Permalink | Comments (26)
Categories: Property taxes
        

Now that property-tax bills are hitting mailboxes, I've started to hear variations on this theme: "Why the heck did my tax bill go up if my property assessment went down?"

Blame the Homestead tax credit -- that's the most likely reason, anyway. The complex system for shielding owner-occupiers from big increases has a flip side, namely that many homeowners continue to see their total-due expand in a downturn.

Here's why:

Continue reading "Property-tax bill rising? Here's one reason why" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (16)
Categories: Homestead Property Tax Credit, Property taxes
        

Some people think the city should dramatically reduce its property-tax rate, some think it shouldn't (or can't), but everybody's talking about it these days.

Now comes Jody Landers, one of the mayoral candidates, with more specifics about his plan.

You can find it, just released, right here.

The essence is this: He proposes a 30 to 35 percent drop in the rate over the next four to six years, which would take it from almost $2.27 cents per $100 in taxable value to somewhere between $1.45 and $1.60.

He argues that a dramatic decrease by itself would not produce enough growth to quickly make up for all the lost revenue. So he would pair it with a "combination of spending reductions and new or increased revenue measures that do not detract from the City's ability to compete for residents and business."

In addition, he would change the property-tax system so that properties vacant for an extended period and those identified as "blighted" would be taxed at higher rates. (Washington has such a tiered system, and Wonk reader Matt Gonter has pressed for the city to adopt it, too. UPDATE: Here's another link to more backstory.)

"Property owners who maintain and improve their properties and are thereby helping to increase the tax base reap the reward of a lower tax rate, and those who are detracting from the tax base pay a higher share of taxes," Landers writes in his plan.

Thoughts?

Do you have a favorite tax-reduction (or non-reduction) plan?

Posted by Jamie Smith Hopkins at 1:34 PM | Permalink | Comments (23)
Categories: Property taxes
        

Calls to cut the city's high property-tax rate have been long-standing and numerous. What's grabbed attention more recently is the idea of slashing it in half.

An economist at Loyola University Maryland suggested that such a move would revitalize Baltimore, pointing to good effects in cities -- such as San Fransisco -- that years ago had big cuts imposed upon them by voters. Councilman Carl Stokes, a mayoral candidate, proposed halving the rate over three years.

Now the city's Finance Department has weighed in, saying the only way Stokes' plan wouldn't dent revenues is if more than 500,000 new residents move in.

That's the equivalent of two-thirds of the people who left the city in the last 60 years coming back.

Colleague Julie Scharper had the story over the weekend, and I figured you'd all be interested in chewing over this newest development. As you might expect, supporters of a lower rate don't agree with the Finance Department's conclusions. They think it overstates the needed expansion.

Stephen Walters, the Loyola professor, said the report ignores a variety of financial benefits from an increase in residents, including more jobs, businesses and vacants-turned-rehabs. He told Scharper that the report was "really bad economics."

Joseph T. "Jody" Landers III, the mayoral candidate who runs the Greater Baltimore Board of Realtors (update at 9:15 a.m.: he's leaving that job to run full-time) and is suggesting a rate reduction over the next four years of 25 to 35 percent "or more," also fired back.

Continue reading "The cost of a lower city property-tax rate" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (29)
Categories: Property taxes
        

Baltimore City Councilman Carl Stokes submitted a charter amendment last week that would do what most readers here seem to want: cut the city's property-tax rate in half.

In an interview, he said everyone is telling him such a reduction is important -- "except the mayor and City Council."

One colleague on the council calls his proposal a "tooth fairy plan." A spokesman for Mayor Stephanie Rawlings-Blake said the idea would result in "irresponsible cuts" to an already strapped budget.

Here's what Stokes, a mayoral candidate, is suggesting:

Continue reading "Councilman: Cut Baltimore's property-tax rate in half" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (16)
Categories: Homestead Property Tax Credit, Property taxes
        

Anne Arundel County residents are getting good use out of the Homestead break: They won't be billed for property taxes on about $12 billion in assessed value in the fiscal year that starts in July, according to the state Department of Assessments and Taxation.

That's by far the top amount in the state, helped along by the county's fairly low Homestead cap. The tax break puts a ceiling on how much of an owner-occupant's assessed value can be taxed in a given year, and in Anne Arundel, the increase can't top 2 percent annually. (Statewide, the cap ranges from a high of 10 percent to a low of zero. Yes, zero.)

No. 2 for Homestead use: Baltimore County, at $6.7 billion in untaxed assessed value.

The effect of the Homestead tax break isn't spread evenly around the state, thanks at least in part to the range in caps. Six jurisdictions have Homestead-shielded assessable amounts that come to nearly 10 percent or more of their total assessable bases. (Talbot's comes to a whopping 30 percent.) But it's 1 percent or less in 10 other jurisdictions.

Here's the breakdown:

Continue reading "Who's reaping the most benefit from the Homestead tax break?" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (3)
Categories: Homestead Property Tax Credit, Property taxes
        

Probably not surprising, given the frequent griping about Baltimore property taxes, but the vast majority of readers who took a poll about a proposal to slash the rate in half -- with a several-year lead-in period to build up a cash cushion -- say the city should go for it.

Eighty-five percent of poll-takers chose that option. Another 10 percent say they're intrigued but not sure.

Three percent say no thanks. And the remaining few wrote in answers, from "I wouldn't trust the city to deliver the rate cut" to "It makes logical sense and is the way to go for future residents" to "Tax rate could be zero and I still wouldn't live in the city."

It would be interesting to see a scientific poll on the subject with, you know, margins of error and such.

Here's the original Q&A on the proposal, offered by an economist and one of his former students, and the companion blog post.

And here's a new video, in case you just can't get enough on the topic:

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (8)
Categories: Property taxes
        

Baltimore's new release of government data at OpenBaltimore lets you see how much the owners of each property are paying without having to look it up one at a time at the city's property-tax lookup site.

It's a huge file, the sort requiring a database manager such as Access to analyze, but you can page through the display on the site itself and do some sorting there as well. Top amount: $4.3 million -- that's for an office tower. Lowest: thousands of $0s for religious, nonprofit and government properties.

Also at OpenBaltimore: parking fines, 311 calls and a lot more.

Find something intriguing? Please share.

I'm not trying to make this a property-tax week, by the way. I'll have some completely non-tax-related topics for you soon.

Posted by Jamie Smith Hopkins at 3:40 PM | Permalink | Comments (11)
Categories: Housing stats, Property taxes
        

So an economist is suggesting Baltimore cut its property-tax rate in half. And he's suggesting it in an election year.

Naturally, I'm curious what you all think.

The proposal is a little bit more complicated than "just cut," so here's a summary in case you didn't see the Sunday Q&A or Monday blog conversation:

Loyola University Maryland's Steve Walters, in a paper with former student Louis Miserendino, recommends officials amend the city charter to ensure that the rate will drop at a specified time -- say, in three or four years -- to give people a reason to buy while prices are still depressed (compared with the suburbs) by the current rate. Set aside any extra tax revenue that comes in and spend it only after the rate is slashed, they say. They're calling it the "cash on delivery" plan.

If it were up to you, what would you do?

Do you think the city could get through this sort of major shift without a big dent to its budget?

Do you have alternative suggestions for city leaders and would-be leaders?

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (31)
Categories: Property taxes
        

The long-standing political consensus on Baltimore's property-tax rate seems to be that it's a necessary evil. The nearly 2.3 percent rate is so much higher than in the rest of the state that it's a disincentive to buy in the city, but substantially lowering it would immediately dent revenues and force big budget cuts -- so the argument goes.

Steve Walters, an economics professor at Loyola University Maryland, is offering up a plan designed to get the city out of that box.

He and a former student, Louis Miserendino, suggest the city reduce the tax rate by half -- yes, half -- in one fell swoop. But not right this instant. Instead, they write in a new paper, officials should amend the city charter to ensure that the rate will drop in, say, 2015, giving people a reason to buy while prices are still depressed (compared with the suburbs) by the current rate. Then bank the extra money that flows in and spend it only after the rate is cut.

Walters believes that "cash on delivery" plan would be a bridge over the initial budgetary chasm of a halved tax rate. Cities that were forced by tax revolts to slash rates 30 years ago saw revenues surpass their original levels pretty quickly, he said -- within four years in San Francisco, for instance.

Here's a Q&A with Walters about the plan, the political reaction and why he thinks the property-tax rate is the key reason for Baltimore's decades-long population loss.

But if you've seen that already, I figured you might like to hear more of what he had to say and offer your feedback. Read on: 

Continue reading "Slash Baltimore property-tax rate in half, economist says" »

Posted by Jamie Smith Hopkins at 12:01 AM | Permalink | Comments (14)
Categories: Property taxes, Q&A
        

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. 

Continue reading "An outsider perspective on Md. property-tax rules" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (16)
Categories: Homestead Property Tax Credit, Property taxes
        

The state usually gets property-assessment appeals on fewer than 5 percent of homes a year. But a company that specializes in appeals thinks many more homeowners than that are overassessed.

ValueAppeal, which added Maryland to its online service in May, analyzed properties that were last reassessed a year or two ago as part of the state's three-year cycle and says comparable-home sales suggest that a quarter are significantly overassessed. Baltimore City has the highest share, the company says.

(The deadline to appeal your assessment for July 1 tax purposes is Monday -- that's when they must be postmarked -- if you aren't in the group that was just reassessed.)

Here is ValueAppeal's analysis for Baltimore-area jurisdictions:

ValueAppeal dubs a property "overassessed" if comps suggest that the overage amounts to at least $300 in extra taxes. (It set that threshold because it charges $99 for its services, after the initial free look-up to determine if you could benefit from appealing.)

The average savings calculated above accounts for the fact that some homeowners would have two years of lower taxes and some would have one, depending on where they were in the assessment cycle.

But the savings figure assumes that everyone is paying on their full assessment. Thanks to Maryland's complex Homestead tax credit system, that's frequently not the case.

Continue reading "How many homes are overassessed?" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (9)
Categories: Homestead Property Tax Credit, Property taxes
        

American homeowners were asked in a new BIGresearch poll whether they're appealing to have their property taxes lowered. About one-quarter say they either plan to or already have. Another one-quarter haven't decided.

So there's a lot of tax angst out there. But what about here, specifically?

On the one hand, Maryland sent out notices this week to the one-third of homeowners who were just reassessed for tax purposes, and 95 percent of them have lower valuations now than they did three years ago. Average drop: 22 percent. On the other hand, two-thirds of homeowners were last assessed a year or two ago, and prices have continued to fall since.

Satisfy my curiosity: Do you plan to appeal your assessment? (You can play along if you're not in Maryland, too -- just make sure you choose the appropriate category.)

Once average assessed values began to fall in Maryland, so did the number of people contesting those new valuations. But out-of-cycle appeals -- the petitions mailed in by owners who weren't just reassessed -- have skyrocketed:

Continue reading "Real estate poll: Are you appealing your assessment?" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (7)
Categories: Polls, Property taxes
        

Assessed values are down an average of 22 percent on homes Maryland assessors just evaluated, about one-third of properties in the state.

The Maryland Department of Assessments and Taxation, which is announcing the details today as it mails out the notices, called it a record drop. (The group of homes reassessed late last year declined almost 20 percent on average.)

Here's the county-by-county breakdown in the Baltimore metro area:

Anne Arundel County: down 23 percent

Baltimore City: down almost 14 percent

Baltimore County: down about 18 percent

Carroll County: down about 20 percent

Harford County: down about 17 percent

Howard County: down almost 23 percent

Baltimore's drop was one of the smallest in the state. The city also had the smallest share of  residential properties that declined in assessed value -- 74 percent, compared with 95 percent in the state overall.

Want to contest your property assessment? Here's how:

Continue reading "New property assessments in Md. -- and how to appeal them" »

Posted by Jamie Smith Hopkins at 12:01 AM | Permalink | Comments (30)
Categories: Property taxes
        

Maryland caps annual property-tax increases for people who live in their homes. But there's an exception for sizable home improvements -- and you really don't want to find out about it after you're on the hook.

Normally, the state's Homestead tax credit kicks in once you hit your second July 1 in your property. That means your property-tax bill can increase only up to a certain amount every year -- 4 percent in Baltimore and Baltimore County, for instance. (Full list here.)

But if you've made more than $100,000 in improvements to the property, the Homestead cap doesn't shield you from the taxman. Even if you didn't make the improvements yourself but instead bought a recently spiffed-up home that the state hasn't already reassessed, you could end up with a sizable tax hike a few years down the road.

That's the sort of thing you want to budget for. Here's how the exception works:

Continue reading "Don't get surprised by this property-tax rule" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (14)
Categories: Homestead Property Tax Credit, Property taxes, Resources for new buyers & owners
        

The taxman may cometh, but he does not call. Scammers are hoping some Baltimore County residents don't know that.

The county police department is hearing from senior citizens that they're getting calls claiming their property taxes are overdue and demanding the money immediately. "In at least one case the senior citizen was asked for banking information (account and routing numbers)," the police said in a statement.

It should be needless to say, but just for the record: Don't give that information out to anyone calling you out of the blue, let alone supposed property-tax collectors.

Turn the tables on them -- ask for the caller's name and a callback number. "Remember, the phone number could be linked to a fraudulent location," the police say.

I've heard of scammers calling people about supposedly missed jury duty, but this is a new one on me.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (3)
Categories: Property taxes
        

A colleague of mine had an unfortunate new-homeowner surprise this summer: She got her first full fiscal year property-tax bill, and the monthly cost is a lot higher than she expected based on the taxes she paid for part of the last fiscal year.

She's hardly the first to be caught off guard, thanks to the state's complex Homestead tax credit.

I did a post recently that explains how you can calculate your property-tax bill in advance to avoid a shock come July 1. But here are more details on how the Homestead credit works, since it seems to be a frequent point of confusion.

The Homestead credit is really a cap: It limits the annual increase in owner-occupants' taxable assessments, thus limiting the increase in your property-tax bill as long as rates don't change. The Homestead ceiling ranges across the state. It's 4 percent in Baltimore and Baltimore County, for instance, which means you can't see more than a 4 percent increase in the portion of your assessment you're taxed on in any one year.

There are four exceptions to the rule, the state assessors say. The cap lifts for a year if the previous assessment was "clearly erroneous," if you successfully request a zoning change that increases the property value, if you make a substantial change to the property (rehab it, for instance) or -- and this is the one that comes into play for new buyers -- if the property transfers to new ownership.

Continue reading "A property-tax reminder for new buyers" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (20)
Categories: Homestead Property Tax Credit, Property taxes, Resources for new buyers & owners
        

In a year when property-tax collections rose in all but a few states, Maryland had the smallest of the increases, according to a new study.

The Tax Foundation analysis, which compares fiscal 2008 with 2007, says property tax paid per capita in Maryland inched up about half a percent -- less than $10. Per-capita tax collection dropped in Michigan, South Carolina, Texas and Vermont, but increased everywhere else -- with double-digit jumps in D.C., Florida, Indiana and New Mexico. 

You'd hardly know the country was well into a severe housing slump at the time, judging by tax collection, the group says.

Continue reading "A small property tax increase in Md." »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (8)
Categories: Property taxes
        

Psst ... better not appeal your property assessment -- the state will take away your Homestead tax credit!

It's a persistent rumor. Like many persistent rumors, it has a bit of truth all twisted out of shape.

You have to understand how the Homestead tax break works to see why this could be true, depending on the circumstances, but not in the "if you dare question us we'll show you" way that some homeowners assume.  

Here's the bottom line: If you were eligible for the tax break before you appeal, you're still eligible afterward -- but the value of your credit might drop to zero if you convince the state to lower your assessment in a big way.

Trust me, this isn't bad news. Read on to see why.

Continue reading "Busting a myth about Md. property-assessment appeals" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (10)
Categories: Homestead Property Tax Credit, Property taxes, Resources for new buyers & owners
        

In case you missed it yesterday: Check out the story of Tim Nickels, a roofer whose Baltimore rowhouse went to tax sale because of fines for the state of his back yard and $3.91 in mistakenly unpaid property taxes.

Nickels, who said he had no idea he owed the city any money, isn't losing his property. How he ended up in tax sale, though, is a heck of a tale.

Got any personal tax-sale stories?

Posted by Jamie Smith Hopkins at 5:00 AM | Permalink | Comments (1)
Categories: Property taxes, Tax sale
        

Property taxes might not seem like the most pressing issue to consider while you're searching for a home, but you'll definitely want to know what your costs will be before you buy. It's especially critical if you're planning to purchase near the top of your affordability range.

And remember, many sellers reap benefits from the Homestead tax credit, so you can't assume that your property-tax bill will in any way resemble theirs. (As Wonk reader mjm mentioned recently, "I saw a 74% increase.")

Here's the good news: It's not hard to calculate your bill for specific homes. Look up the property assessment record online. Divide by 100. Then multiply by the rate in that jurisdiction. (The state's rate is $0.112 for every $100 in assessed valuation, so you'll want to take that into account, too. Just add the state rate to the county rate before you multiply.)

EDIT: Montgomery County resident Louis Wilen notes that Montgomery has a property-tax lookup so you can find out what you'll pay for specific homes. A good thing, since the county's tax schedule is VERY complicated. More on that in a moment.

Wondering what homeowners pay if their property-tax assessments are exactly the same as their jurisdiction's average sale price? Read on:

Continue reading "Maryland property tax rates -- what you'll pay" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (22)
Categories: Property taxes, Resources for new buyers & owners
        

You've been having a very interesting conversation about the fairness, or not, of the Homestead tax credit, which caps property-tax increases for owner-occupiers once they've been in their home a full tax year. (The idea is to prevent tax shocks for longtime owners, but it also means that their newcomer neighbors pay more. Sometimes a lot more.)

Aaron, arguing in favor of the credit, wrote: "The homestead credit encourages people to stay where they are and discourages flipping, in principle. It promotes stable neighborhoods. Whether it's high enough now to actually do that (or policed well enough) is another question. But it's not designed to make everyone's tax bills equal, or equally low, nor should it."

Jelena, who's looking for her first house, took the no-thanks view: "Taxes pay for roads, schools, emergency services, etc. If someone bought a house 30 years ago, they are using the roads today and they need to be maintained today at ... today's cost. And I agree that it's 'robbing Peter to pay Paul'."

Andy can see it both ways:

Continue reading "Thumbs up, down, sideways on the Homestead tax credit" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (8)
Categories: Homestead Property Tax Credit, Property taxes
        

Edward L. Kennedy, a Perry Hall resident, qualifies for the Homestead tax break. That doesn't mean he likes it.

His credit for the condo he moved into three years ago is $85. His neighbors, who moved in several years earlier, is substantially larger. Thus his tax bill is nearly $800 more than theirs even though their condos have identical assessment values.

"Now if that’s not fair, I don’t know what is," said Kennedy, 83.

The Homestead credit caps the annual increase in owner-occupants' tax bills. That ceiling ranges across the state; in Baltimore County, where Kennedy lives, it's 4 percent. The idea behind it is to protect owner-occupants from huge one-year spikes in their bills, but it has the side effect of pushing more of the tax burden onto newer buyers.

"You're robbing Peter to pay Paul. I’m Peter,” Kennedy says.

As colleague Larry Carson pointed out in a story in 2005, the height of the housing boom, neighbors' tax bills can differ "sharply" under this system.

Continue reading "Is the Homestead tax credit a bad idea?" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (21)
Categories: Homestead Property Tax Credit, Property taxes, Resources for new buyers & owners
        

If you're a first-time home buyer, or just buying a home in the Baltimore area for the first time, you might not know everything you need to know. Worse, you don't necessarily know what you don't know until it comes back to bite you.

A newcomer who got bitten inspired me to start collecting New Buyer 101 posts in one easily accessible place. I'll link them all to this one, adding more as they're written. Some are most helpful if you haven't bought yet, and others are intended as aids once you're already in your home. (Some long-time homeowners might find useful tips here.)

A number of readers suggested subject matter, and I'll be working through that list as I can. I'll happily take more suggestions (or requests) in the comments on this post.

One word of warning -- some of these posts were written a few years ago. I glanced through for outdated information or broken links, but please let me know if anything needs fixing. 

Here are the links:

Continue reading "Buying a home in the Baltimore area for the first time?" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (4)
Categories: First-time home buyers, Homestead Property Tax Credit, Property taxes, Resources for new buyers & owners
        

Hey, all you Baltimore homeowners who received a faulty property-tax bill this month: Has your situation been resolved?

Nearly 8,000 wrong bills went out, the city says. Many were to people who bought their home during the tax year that ended June 30, telling them -- thanks to an error related to the Homestead tax credit -- that they were past due. Another tax break, the Homeowners' Property Tax Credit, was improperly applied to other owners' bills, prompting the city to send a second set almost immediately after the first went out.

At the time, the city said it expected that all accounts would be corrected by last week. (You can see if yours is by going to the city's online site for property-tax accounts.) 

But I just heard from one resident who says she's still trying to resolve her Homeowners' tax credit problem. I hope that's not the general trend.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (0)
Categories: Property taxes
        

In Maryland, the state assesses property for taxation purposes, but it's the jurisdictions that do the collecting. The upside is that the people trying to determine what your property is worth are not the same people demanding you pay up.

The downside? Ditto.

Baltimore resident Bill Hopkins shared his experience of interagency frustration recently. Here's his story:

Continue reading "Right hand, meet left hand (property tax edition)" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (3)
Categories: Property taxes
        

Baltimore officials now say they've determined that the city -- not the state -- is to blame for the wrong property-tax bills sent to nearly 8,000 homeowners. (Both have a hand in the property-tax process because the state provides the assessment data the city uses to collect.)

More in this story, but here are a few key details:

--Most of the bills, about 6,100, wrongly claimed that the homeowners had not paid all they owed for the last tax year

--The city says a task force is working on ways to prevent this sort of problem from happening again

--The Bureau of Revenue Collections says it doesn't believe many residents paid these bills, but it promises to find out who did and promptly refund the money. (If you're not the wait-and-see type, the city says to call 410-396-3987.)

The city expects that all accounts will be corrected next week. To check yours, go to http://cityservices.baltimorecity.gov/realproperty.

Posted by Jamie Smith Hopkins at 12:01 AM | Permalink | Comments (0)
Categories: Property taxes
        

Jared Franz feels he's in the poorer-but-wiser category of home buyer. He's hoping to help get the word out so others can avoid pitfalls that aren't easy to spot if you're a first-time purchaser or a newcomer to the region.

He and his wife moved from Chicago to Baltimore last year, and they were shocked to discover -- when they got their property tax bill recently -- that they're paying taxes on a much higher amount than their purchase price. They paid $485,000 for their Canton rowhouse, a foreclosure. The assessed value? Nearly $750,000.

That's $6,357 more in taxes than they expected to pay, based on the purchase price. As Franz notes, that's a $500-plus monthly bump to his housing costs. "Ouch!" he summed up succinctly in an email to me. (Franz, who saved up his down payment over 10 years, said the unexpected cost is a real burden.)

Local homeowners are probably vaguely aware that the state's reassessment cycle for each home is once every three years. But Franz, new to the area, didn't realize that the state doesn't automatically adjust a property's assessed value based on its sales price. No one told him so, or that there are limited periods to appeal. (More on that in a moment.)

I've written about property-tax appeals before, but I'm thinking a "Read This Before (or Shortly After) You Buy a Home Here" post would be really useful for folks -- hopefully anchored on this blog in a way that people could easily find down the road.

So here's my request to you all: Tell me what a new or new-to-the-area buyer ought to know, besides property tax rates, transfer tax costs and the appeal process. What information should such a post include? What do you wish you knew before you bought? I'm looking for Maryland-specific things.

While you're pondering that, here's the rest of Franz's story -- and the appeal rules:

Continue reading "What new home buyers should know" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (25)
Categories: First-time home buyers, Property taxes
        

If you're completely flummoxed by a recent Baltimore property-tax bill, you're probably one of the 7,900 or so city homeowners whose accounts were upended by a state computer error.

The mix-up resulted in past-due notices -- some for thousands of dollars -- for certain residents who bought a city home during the tax year that ended June 30.

Some recipients of the Homeowners' Property Tax Credit for lower-income residents, meanwhile, received incorrect bills for the tax year that began July 1. They were just sent out a second set last week with the right figures -- some higher, some lower.

Folks with past-due bills they shouldn't have received will be mailed notices next week setting the record straight, the city says.

Owen C. Charles, supervisor of the state Department of Assessments and Taxation office in Baltimore, said the computer trouble affected the value of tax credits in both situations. (The bills themselves came from the city, since the assessors don't collect. Once the wrong information was shipped to the city, it was automatically turned into bills.)

More details in today's story.

UPDATE on Thursday: I thought both the state and the city were agreeing yesterday that the problem begin with the state, but Charles says this morning that it's too early to say whose fault it is. He's still investigating. He says he is certain the state's property database itself is accurate, and the problem was tax-credit information incorrectly applied. (Application of tax-credit information is the city's job, he says.)

"I couldn't tell you exactly what the problem is -- I just know it's not with the state's data," he says. "We're hearing from the city it's the state's fault, so we're trying to ensure if it's the state's fault, we rectify the situation."

As I was trying to get to the bottom of the wrong bills, a reader emailed to say she'd run into another assessment problem.

Continue reading "Baltimore property-tax bill mistakes" »

Posted by Jamie Smith Hopkins at 12:01 AM | Permalink | Comments (2)
Categories: Property taxes
        

Mayor Stephanie C. Rawlings-Blake's transition committee of 150 (yes, 150) volunteers has several pointed things to say on real-estate-related matters.

In its newly released report, it criticized Baltimore's Department of Housing and Community Development, urged action on the 30,000 vacant properties in the city and suggested that the time might have come to revoke nonprofits' property-tax exemption.

"The reality is that City government cannot continue to function as it has in the past," the committee wrote in its report.

The nonprofit tax suggestion is for "all or some" nonprofits to "be assessed at a reduced rate, to offset the cost of services provided them." The city has looked to nonprofits before in tight times. (Here's a 1996 story about "payments in lieu of taxes," in case you'd like to take a trip through memory lane.)

Other tax suggestions to consider, committee members said: a nonresident earnings tax -- often known as a "commuter tax."

The housing and community development department, which goes by Baltimore Housing nowadays, came in for sharp words. Committee members wrote that the agency "is often the last actor to commit public subsidies to a development project, resulting in significant delays."

"The department’s strategic plan must emphasize community development and neighborhoods, as the agency appears to lack a clear and coherent vision for revitalizing Baltimore's neighborhoods," the report says. "Almost symbolic of the agency's lack of vision is that it has dropped 'community development' from its name."

The committee also wants to see the 30,000 vacant properties in the city managed better -- and a close scrutiny of everything the city owns, vacant or not. Sell, in other words.

"Properties that are not needed for public use ... should be offered to the public in an open and transparent fashion," the report says.

Here's Julie Scharper's story about the report.

So: Thoughts?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Neighborhood improvement, Property taxes
        

Back in December, Baltimore's City Council asked state leaders for the ability to tax owners of uninhabitable properties at a higher rate than everyone else. Now that it's before the General Assembly, though, the proposal is attracting opposition.

From the city.

In a letter to legislators, the head of the city's office of intergovernmental relations says the administration doesn't want it after all.

"We believe that a universal application of a penalty such as [a] specific tax as proposed .... would contradict the business model employed in distressed areas by both non-profits and for-profit developers alike to acquire inventory and hold them until they possess enough properties on a specific block or neighborhood to commence redevelopment," Diane Hutchins wrote. "Our further concern is that the legislation may have negative public policy implications by harming certain property owners for situations beyond their control including owning property adjacent to City owned vacant buildings and collapsing privately held abandoned property."

A city's mayor and council don't always see eye to eye. But the twist in this case? Mayor Stephanie C. Rawlings-Blake was president of the City Council in December and -- according to the official record -- was among the 14 members voting "yea." (Council member No. 15 was absent.)

State Sen. George W. Della Jr. of Baltimore, who introduced the Senate version of the bill, said after a committee hearing Wednesday that he felt like he "got sideswiped by a hit-and-run driver."

"The Baltimore City Council sends us a resolution; they support this concept unanimously," Della said. "I introduced legislation based on all of that, plus other favorable comments from a lot of folks, not only in my legislative district but from around the city. Honestly, I believe it could be a good tool for the city to use."

When she spoke to Baltimore Sun staff in January, Rawlings-Blake listed it among her priorities in Annapolis and said the idea was "to create incentives for active homeownership." So I was curious to hear how city leaders got from "let's do it!" to "bah" two months later, but neither Hutchins nor Rawlings-Blake's spokesman returned my calls.

The Maryland Chamber of Commerce -- which also opposes the proposal -- was happy to chat about it, though. 

Continue reading "City changes mind on property-tax proposal" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (10)
Categories: Property taxes
        

If you're buying a home in Maryland before July 1, add one more potential item to your to-do list: Appeal the property-tax assessment.

Anyone purchasing property in the first six months of the year can appeal within 60 days of purchase, rather than waiting around for the home to be reassessed. (Anyone can appeal any year, as it happens, but you'll have to wait longer for results to show up on your bill if you're not a new buyer.)

More details about the "appeal upon purchase" here.

Montgomery County resident Louis Wilen, who successfully appealed his assessment recently, suggested I remind you all of this option. "An 'Appeal Upon Purchase' is almost certain to result [in] tax savings for the 1/3 of homebuyers whose house was assessed in 2008, since 2008 assessments are based on bubble values," he wrote me.

"For example, there are many homes in my area that were assessed at about $600,000 in 2008, but have sold for about $500,000 during the past two months," he notes. "Every one of those homebuyers could potentially save about $1000 in property taxes when the bills come out in July -- but only if they submit an 'Appeal Upon Purchase' within 60 days of the purchase date." 

Have you appealed upon purchase? How did it go? (Or are you waiting to hear?)

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (6)
Categories: Property taxes
        

Louis Wilen of Olney will be paying less in property taxes this July than he otherwise would be, thanks to a successful appeal. And he didn't have to wait for a reassessment to register his disagreement.

As I mentioned back in December, homeowners can appeal in the midst of the three-year assessment cycle, not only when a new notice shows up in their mailboxes. Wilen is heading into the third year of his assessment period, and he was convinced his property is worth less than the state assessors' calculation of several years back.

Original value:  $526,360.

New value, post-appeal: $456,810.

That's an almost $70,000 drop, which he notes is a tax savings of about $715 -- assuming no system-wide changes, such as a rate hike.

Successful appeals don't always work out to a property tax savings for homeowners. If, thanks to the state's homestead credit, you're paying on $200,000 of a $350,000 assessment, you'd need a more than $150,000 decrease to end up with a smaller bill.

But Wilen notes that his appeal dropped him below his homestead credit amount, so he's ahead.

If you've appealed, have you had your hearing yet?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (6)
Categories: Homestead Property Tax Credit, Property taxes
        

Those of you following the idea of a split property-tax rate in the city -- one for regular homes, and a higher one for "vacant and uninhabitable" properties -- will be interested to know that state Sen. George W. Della Jr. of Baltimore has introduced a bill that would make it possible.

You can track the bill here. It's just in its early stages now.

The City Council passed a resolution in December that asked the state for authority to set a two-level rate. Read more about that history here.

Thanks to several Wonk readers for the heads up.

UPDATE 2/17: Here's the PDF of the bill, which defines vacant and uninhabitable as properties that have been "cited as vacant and abandoned on a housing or building notice for at least a period of 1 year." And here's the House version, now filed.

Posted by Jamie Smith Hopkins at 11:37 AM | Permalink | Comments (5)
Categories: Property taxes
        

The about-face was an immediate reaction to an opinion issued yesterday afternoon by the Maryland Attorney General's office, which said statute and case law don't give counties the authority to tax homes in the way the county was doing.

More in today's story, including the promise of refunds -- though few homes actually got taxed in this way, the county says.

The original story about the uproar over the taxing practice is here.

No one who commented on the blog post about it said they agreed with the policy. Wonk reader Frank Rizzo, for instance, thought the county should stop:

"If you owe 300k and the homes are selling for 200k, then guess what? The home is worth 200k," he wrote. "If the home was worth more, then most likely they would sell the home for more. ... It should not matter what the seller owes on the home when determining transfer taxes, as they are based on the SALES price. The County wants to keep assessments higher because they know if they ... come down, their property tax revenue will fall too."

Thoughts?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (3)
Categories: Property taxes, The foreclosure mess
        

Should short sales be taxed differently than "regular" home sales?

Anne Arundel County thinks so. It's levying its recordation tax on the sales price plus any forgiven debt, and the Anne Arundel County Circuit Court is doing the same with state and county transfer taxes.

The county says it's not a policy change and it's just following the law. But real estate agents say it wasn't collecting taxes this way until last week, and that they discovered it the hard way -- by not being able to record sales that had already been to the settlement table.

A title industry trade group says it knows of no other government in the country handling short sales in this way. (Read more about the argument in today's story.)

You probably know what a short sale is if you're reading a blog with a name like "Real Estate Wonk," but just for form's sake, a quick explanation: It's a home sale with a contract price that's less than what the seller owes on his or her mortgage, and the lender is allowing it to go through without demanding all of the difference at closing.

The thing is, lenders are frequently leaving their options open on how they're going to deal with that debt, approving short sales but reserving their right to go after the borrower later. So says Andrew Levy with the Crofton-based Capitol Title Insurance Agency.

Continue reading "Anne Arundel Co. taxing forgiven debt on short sales" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (7)
Categories: Property taxes
        

Add another voice to the running conversation about Baltimore property taxes, and how the city's difficult budget could affect them: Stephanie Rawlings-Blake's spokesman. Ryan O'Doherty wanted to share two pieces of information with you all.

First, the scope of the dilemma: The finance department says the city is facing a $127 million budget deficit next fiscal year. To put that into perspective, O'Doherty said, that's the cost of employing half the police force or all the fire fighters.

But he said Mayor-to-be Rawlings-Blake was serious when she said that raising the property-tax rate "would be the last resort." The first resort -- before anyone starts talking about tax increases, property or otherwise -- are cuts:

"We've got to show people that the city is serious about making reductions in areas that are not essential before we start having conversations about revenue," O'Doherty said. "I think city residents deserve that -- before we go to their pocketbook, we take a serious look at what we’re spending money on."

Any cuts come on top of what the city already reduced to deal with the effects of tax collections hammered by the bad economy and depressed home sales. As Julie Scharper reported:

The city has eliminated more than 500 jobs, including laying off more than two dozen employees, reduced trash pickups and implemented rotating closings of fire stations to tighten the budget for the current fiscal year. A hiring freeze has been in place since November 2007 and many capital projects have been put on hold. Government offices are set to close for five mandatory furlough days. Most of the unions that represent city employees have agreed to cuts, but the Fraternal Order of Police is engaged in arbitration with the city over reductions. 

Food for thought -- and discussion.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (11)
Categories: Property taxes
        

I'm beginning to think that Baltimore's mayor-to-be has come up with a nifty way to separate optimists from pessimists. When Stephanie Rawlings-Blake said this week that raising the property tax rate would be "the last resort" but remains "on the table, as any other revenue source is," you could either focus on the "last resort" part and feel relieved or the "on the table" part and take it as a warning of tax hikes to come.

Judging by the comments, many of you see the glass half empty. At least when it comes to city property taxes.

Charlie wrote, "If you want to further drive down housing prices and make Baltimore City real estate look like a bad investment, then by all means look into raising the property taxes. If that's what happens, I will never vote for her in an election."

jtn commented, "If property taxes are raised, I'm moving. I pay almost 6k a year for a row home that is 12x70. It's ridiculous."

And GreenAcresIsThePlaceToBe said, "Just knowing that they are even considering raising property taxes in the City is unnerving. I pay (2X,3X, maybe even 4X)higher property taxes, Special Benefits taxes, exponentially higher utility bills, and 2X or 3X higher insurance to live in a rowhouse in the City versus a single family house in one of the suburbs. It is already ridiculous. Don't worry about my vote if you raise taxes, I won't be here for the next election."

Continue reading "A Rorschach test property-tax comment" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (29)
Categories: Property taxes
        

What does City Council President Stephanie Rawlings-Blake, who becomes Baltimore's mayor Feb. 4, think about the property-tax rate? We got a taste yesterday when she met with Baltimore Sun staff to discuss her priorities and answer questions.

The budget, as you can imagine, was one of the first topics. That's how the subject of taxes came up:

"You have to be frank that [increasing] the property tax would be the last resort, just because ... my goal is to get to the point where we could reduce the property tax and make the city more competitive with other jurisdictions," she said. "But while it's a last resort, it's still on the table, as any other revenue source is."

Not that it's ever fun being the jurisdiction with a property-tax rate more than twice as high as Maryland's counties, but it's especially unfun in this sort of economy. Rawlings-Blake said her finance director, Edward J. Gallagher, tells her the deficit is the worst he's ever seen. She promised that her focus would be "public safety and essential services, as well as getting the budget under control."

One of her priorities in Annapolis is also property-tax related:

Continue reading "City's incoming mayor on property taxes" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (28)
Categories: Property taxes
        

Adam Meister, Reservoir Hill activist and blogger, is a fan of the "constant yield tax rate" -- the rate your local jurisdiction would have to charge to bring in exactly as much money next fiscal year as it's getting from property taxes now. When a local government leaves the rate alone, it typically gets more money thanks to rising assessment values. But as Meister notes, assessment values have been falling:

It is theoretically possible that in 2011 the city may be faced with a situation where they will have to RAISE property taxes to make up for a decrease in assessments. It is highly likely that such a situation will occur in 2012.  ...

This is why we must cut government programs, fire government workers, and lower the property tax rate to the CYTR [constant yield tax rate] in 2010. If we manage our expenses correctly now, then lower assessment will not be a major issue in the future.

One interesting question -- and I don't know the answer to it -- is what percentage of residents with lowered assessments will still get annual tax-bill increases for some years to come, courtesy of the homestead tax credit.

As I've noted, and as columnist Jay Hancock spelled out, some number of residents are paying taxes on a lesser amount than even their soon-to-be reduced assessment value. That's because the homestead credit limits the assessment increase owner-occupiers pay taxes on in any one year. (In Baltimore, the cap is 4 percent.)

A Wonk reader named John commented here recently that the whole assessment and taxation system seems unfair to him:

Continue reading "Property tax and assessments: Your thoughts" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (16)
Categories: Homestead Property Tax Credit, Property taxes
        

Here's a gee-whiz real estate number of the day: $43.6 billion. That's the three-year decline in home values in just one-third of the state, according to Maryland's assessors. (The state's reassessment cycle touches a third of properties every year.)

Think about that -- $43.6 billion. In one-third of one state.

The biggest assessment drop came in Montgomery County, the most populous jurisdiction in the state, which saw an $11 billion decline. Prince George's County followed, down $6 billion, with Anne Arundel County close behind at $5 billion.

I checked a few reassessed streets, just for kicks, to see some of the homeowner impact.

One couple on Wyndhurst Avenue in Roland Park is getting a $107,000 decrease in assessed value come next year, which brings it below the $565,000 purchase price in 2007.

A couple on Painted Tree Drive in Randallstown is getting a $70,000 decrease -- but still well above their 1995 purchase price, so their tax bill will probably go up 4 percent next July as they work on closing the gap between their assessment and what they're actually being taxed on.

And a couple who bought a home on Summer Hill Drive in Ellicott City for $892,000 in 2005 is getting reassessed for $695,000.

When assessment notices arrive in the mail for you reassessed folks, do share your experience.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Property taxes
        

If you're among the one-third of Maryland homeowners due to get your reassessment notice in the mail soon, odds are good -- very, very good -- that the state has revalued your property significantly downward.

As Larry Carson reports today, assessment values decreased for 93 percent of reassessed residential properties. Average drop: almost 20 percent. The state Department of Assessments and Taxation values homes once every three years, so that change is aimed at reflecting what happened to the housing market between the end of 2006 and now.

The result: smaller property-tax bills due next July ... unless the amount of your homestead credit is so large that a significant decrease isn't enough to affect your tab. In which case you'll actually see an increase as you continue to close the gap between the amount you're paying taxes on and what the state says your home is worth.

The homestead tax break, which all owner-occupiers qualify for after a full fiscal year in their homes, limits the annual property-tax increase you see. In Baltimore, for instance, the cap is 4 percent.

Thus, property-assessment decreases will most affect homeowners who bought in the last few years and the people who don't live in their properties, such as investors.

In the Baltimore metro area, the smallest residential property assessment decline came in the city -- down 5.5 percent -- and the largest in Howard County (down about 23 percent). Anne Arundel County fell almost 20 percent, Baltimore County almost 18 percent, Carroll County just under 22 percent and Harford County about 15 percent.

Allegany County was the only spot in the state with rising assessment values, though barely -- 0.1 percent.

As assessment values drop, appeal numbers probably will too. If you're unhappy with your reassessment, though, you'll want to read up on the state's instructions for appealing (and check out this how-to post I wrote a few years back).

If you're not being reassessed but want to appeal, you can do that too -- but hurry, because the deadline to be considered for the next tax year is Jan. 1. Details about this "petition for review" process here.

Posted by Jamie Smith Hopkins at 7:30 AM | Permalink | Comments (3)
Categories: Homestead Property Tax Credit, Property taxes
        

Good discussion, folks, on the city's request to be allowed to tax owners of uninhabitable properties at higher rates than other homeowners. But most of you are silent members of this community, and I'm curious how you all feel about it.

So here's an easy way to weigh in:

In the last property-tax poll, you weighed in on whether the city should significantly lower its property-tax rate now (economist Anirban Basu's suggestion).

Continue reading "Split property-tax rate: Yea or nay?" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (12)
Categories: Polls, Property taxes
        

If you know that Maryland reassesses properties once every three years for purposes of taxation, you probably also know that property owners can appeal when they get the reassessment notice in the mail.

But did you know you can appeal on the off-years, too?

It's a "petition for review," and -- as you might imagine -- more people have been sending them into the Maryland Department of Assessments and Taxation since the housing bubble popped. Most people's homes are worth less now than they were a year or two ago, after all.

You can read about the off-cycle appeals in today's story. Here's the lowdown on how they work.

Deadline to file is Jan. 1 for the following July 1 tax bill. (One exception: If you buy a property in the first half of the year, you can petition to have the assessment reviewed for the tax year beginning that July -- just get your application in within 60 days of the purchase.) Instructions, including appeal form, can be found here. The completed form goes to your local assessment office.

You can ask for a hearing, or you can just ask the state to take another look. Joseph Glorioso, supervisor of assessments in Anne Arundel County, kindly let me take over his office for an hour so I could read a stack of petitions and get a feel for what they're like. Plenty of people simply assert that the assessed value is too high, thank you very much, and sign their name.

But some take the recommended step of offering supporting evidence. One homeowner included a long list of recent sales in his neighborhood and noted that asking prices were even lower than the sales prices.

Here's what the state suggests if you're going to appeal:

Continue reading "Appealing a property assessment on an off-year" »

Posted by Jamie Smith Hopkins at 8:45 AM | Permalink | Comments (5)
Categories: Property taxes
        

It started with a proposal from a city resident, leapfrogged to radio and now it's being backed by the Baltimore City Council: taxing owners of vacant and uninhabitable homes at a higher rate than the $2.268 per $100 of assessed value charged to everyone else.

The council passed a resolution Thursday night asking the city's General Assembly delegation to establish a dual rate. Councilman James B. Kraft, who introduced it, did so at the request of Matt Gonter, the above-mentioned resident.

Gonter thinks Baltimore should follow the lead of D.C., which already has a split rate. It's $10 per $100 in assessed value for vacant properties, compared with 85 cents per $100 for other homes. His hope is that the city, by charging more to owners of problem properties, could then lower its property tax rate for all other homeowners, who now face a rate that's more than twice as high as any of the state's counties.

Because Gonter made his proposal here early on, some of you have already weighed in on it.

Continue reading "City wants to tax 'uninhabitable' homes at higher rate" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (27)
Categories: Property taxes
        

Matt Gonter, a Baltimore resident and property-tax activist, is scheduled to hit the airwaves Tuesday at noon during WYPR's Midday show to chat about a proposal he made on the Wonk blog: hike the tax rate charged to owners of vacant property.

Gonter, long aggravated that slumlords pay much less in taxes than people who maintain their properties, commented: "Follow Washington DC's lead and raise the property tax rate for all vacant properties by 800% or more. With over 30,000 vacant properties throughout the city, this would seem to be a no-brainer." (D.C. sets a rate of $10 per $100 in assessed value for vacant properties, compared with 85 cents per $100 for the rest of the residential landscape.)

Gonter started a Facebook page to promote the idea. He's bemused by how quickly it caught people's attention.

"I can't believe that only a week ago I came up with an idea to start a Facebook group dedicated to taxing slumlords extra, and now I'm going to be on the radio to discuss my proposal," he wrote me.

Gonter's suggestion on the blog was part of a larger proposal to lower tax rates overall. Have your own tax-rate idea? Share!

UPDATE: Josh Dowlut, who had a counter-proposal in this space, has been added to the show's roundtable. He disagrees with Gonter that raising the rate on vacant properties will make a positive difference, and he plans to suggest cost-cutting ideas to get the overall property-tax rate down. "A better alternative would be to get big businesses to pay their fair share and end practices such as the 15 year zero tax gift on Legg Mason’s new 200 million dollar waterfront office tower," he wrote in an email to me.

Posted by Jamie Smith Hopkins at 9:25 AM | Permalink | Comments (13)
Categories: Property taxes
        

As of last night, 92 percent of you poll-takers said you agree with Baltimore economist Anirban Basu that the city's rate of $2.268 per $100 of assessed value needs to be cut now.

Six percent said not now, but when the economy's doing well.

Just two percent opted for the straight "no."

And one person felt so strongly about this that he or she skipped over the "yes" option to write in an answer: "Hell yes."

People usually like the idea of having less taxes to pay, so that was a pretty easy question for you all to answer. Now I challenge you to tackle a harder one: What cuts or adjustments should the city make to account for the (at least short-term) drop in revenue? What can the city do to avoid counteracting the "come on in" message of lower taxes with the unwelcome-mat of decreasing quality of services?

Proponents of rate reductions say a big cut would bring more residents, increasing the sources of revenue, but let's assume for this exercise that tens of thousands of people won't immediately drop everything to move in. (Also, you'll want to take into account that the city is already grappling with reduced revenues. Mayor Sheila Dixon announced in September that the city would have to "immediately reduce spending" to deal with a $60 million decline in revenue and state aid.)

Extra points to anyone with an idea more specific than "reduce waste." Here are two proposals from commenters to get you started.

Continue reading "Your take on city property taxes" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (18)
Categories: Homestead Property Tax Credit, Property taxes
        

Baltimore economist Anirban Basu is convinced the city's property tax rate is to blame.

The city's rate -- $2.268 for every $100 in assessed value -- is more than twice as high as the property tax rates in Maryland's counties. Baltimore County comes closest, at $1.10 per $100. The difference has for years frustrated residents, given city real estate agents indigestion and prompted talk that "something must be done." (The rate is six cents lower than it was in 2002, but most of the Baltimore suburbs lowered their rates, too.)

"We know that people who transact on the basis of an $8,000 tax credit care deeply about their tax exposure," said Basu, who has called for a steep drop in the city's rate. "It's unlikely that people who are looking to minimize their tax bill would choose the city first. It's not that nobody bought in the city, ... it's that not as many people bought in the city as had been anticipated by analysts."

He called on city leaders to lower the property tax rate now, despite the tight budget situation.

"The point is, you can't tax people who don't live here," Basu said. "What the tax is doing is keeping people who would want to live here from being here. ... There's now growing pent-up demand to move out of the city, and this demand is motivated by a desire for greater value."

Read on for a chart, a poll and Basu's thoughts on what drove buyers to the city in a big way during the bubbly years.

Continue reading "Economist: Lower Baltimore's property tax rate now" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (29)
Categories: First-time buyer tax credit, Polls, Property taxes
        

The city recently gave frustrated homeowners who missed the window another chance, but that amnesty period is swiftly coming to a close. The deadline is Aug. 28, next Friday. If you went to settlement on a new home after Oct. 1, 2004 and it's still your principal residence, you can apply. You might also be eligible if your home was substantially rehabbed after being vacant.

More details from the city Department of Finance, including the application form, in this PDF document.

Baltimore resident Matt Gonter, who applied last week, suggests submitting your form in person. That way you get a time-stamped copy for your records, proof that your application was in time.

Amnesty aside, new-home buyers now have two windows to apply rather than one: within 90 days of settling and within 90 days of getting the first tax assessment notice.

Posted by Jamie Smith Hopkins at 8:47 AM | Permalink | Comments (2)
Categories: Property taxes
        

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.

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.

Continue reading "Unearned property tax credits" »

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

Wonk reader Wick asks, "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?"

I put the question to the state Department of Assessments and Taxation. Henry Sikorski, state supervisor of assessments, said Wick doesn't need to worry -- unless there's recent new construction on the home that the state hasn't assessed.

The state will do assessments out of cycle for major work on a home, typically over $100,000 in value. It will also reassess if a vacant lot is built upon or if the property use changes, say from commercial to condo, Sikorski said.

Paying $200,000 for a home the state assessed at $100,000 doesn't in itself prompt the state to come swooping in. "We don't go in and reassess on sales," he said.

Hope that helps, Wick (and anyone else out there pondering the same thing). Oh, and don't forget to apply for that homestead credit. New buyers have a six-month window.

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

If you went to settlement on a new home after Oct. 1, 2004, you can apply for the city’s new-construction tax credit through Aug. 28, when the amnesty period ends. Homeowners in properties that were substantially rehabbed after being vacant may also be eligible.

You can find more details from the city Department of Finance, including the application form, in this PDF document. (You can also read my original post on the topic here.)

Why should you care, you ask? Because the credit reduces a homeowner’s property tax bill by half and then phases in the full amount over a five-year period. Yeah. That's why.

The City Council also changed the process going forward so new-home buyers have two windows to apply: within 90 days of settling and within 90 days of getting the first tax assessment notice.

Posted by Jamie Smith Hopkins at 1:13 PM | Permalink | Comments (0)
Categories: Property taxes
        

Long before there was an $8,000 income tax credit for new buyers, there was Baltimore's property tax credit for newly constructed homes. It makes a real bottom-line difference for buyers, who get their property tax bills phased in. First year, half off. The amount due rises to 60 percent the second year, 70 percent the third, and so forth, which means it's not until year six that someone with the credit is paying the full amount.

Unless the new buyer didn't apply for the credit within 90 days of purchase.

You can imagine how some residents felt when they found out -- too late -- that they had been eligible for a substantial discount on property taxes in the jurisdiction with the state's highest rate.

Now you folks have a second chance.

The City Council has just passed a bill, signed into law Tuesday by Mayor Sheila Dixon, that offers a "one-time amnesty period." It's for people who would have been eligible in 2005 or later had they met the original application deadline. (There's a gray area there, thanks to the law's use of the word "eligible": Certainly you would have been eligible if you bought Jan. 1, 2005. But you also would have been eligible if you bought in the 90 days before that date.)

Continue reading "New chance to get Baltimore new-construction tax credit" »

Posted by Jamie Smith Hopkins at 11:22 AM | Permalink | Comments (5)
Categories: Property taxes
        

Harford County homeowners rejoice: Your property tax rate is going down July 1.

Well, all right, it's going down less than 2 cents per $100 in assessed value -- from $1.082 to $1.064. On a $200,000 house, the new rate adds up to a bill of $2,128, or $36 less than the old rate. But I'm guessing you'd prefer that to a change the other direction.

On a related note: Harford's homestead cap, which limits how much an owner-occupant's tax bill can increase each year, dropped this year from 10 percent to 9 percent. That's still the highest in the Baltimore metro area. But County Executive David R. Craig says on his blog, "The next step is to reduce it from 9% to 5% by the FY11 budget (calendar year 2010)."

Values aren't going up 10 percent or 9 percent or even 5 percent right now. Still, homeowners whose housing-boom values haven't been fully phased in (even accounting for dropping home prices) could see an impact from this change.

I've heard a lot of grumbling about property tax rates over the years, particularly from Baltimore residents, but some Harford Countians went beyond grumbling and started protesting. Harford Property Tax Revolt organized rallies this spring, complete with signs like "Will Work for Lower Taxes." (This Dagger article about a May rally drew 45 comments.)

The old debate during a recession is (a) lower tax rates to help residents in their time of trouble, (b) leave tax rates alone to try to avoid big cuts in services that residents need in their time of trouble or (c) raise taxes to maintain or increase services that residents need in their time of trouble.

What argument do you prefer?

Posted by Jamie Smith Hopkins at 8:49 AM | Permalink | Comments (14)
Categories: Homestead Property Tax Credit, Property taxes
        

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?

Posted by Jamie Smith Hopkins at 9:31 AM | Permalink | Comments (7)
Categories: Homestead Property Tax Credit, Property taxes
        

The city's rate of $2.268 per $100 in assessed value is the highest in the state -- more than twice as high as other jurisdictions' rates. (It's also a continued source of complaint for residents and angst among folks who want more people to move into Baltimore.)

The Dixon administration points out that the cut won't be immediate -- and it relies on slots performance. From today's story:

Under the agreement, the casino would provide ground rent to the city via a profit sharing agreement on gross gambling revenues, and those funds won't begin to flow until the casino is operating, which city officials hope will be in 2011. The money from slots must be used for either property tax reduction or school construction, so those funds cannot be used to eliminate expected budget shortfalls in those years. ...

According to the deal, the bidders will pay the city $20.8 million when the casino opens, which includes ground rent, property taxes and other revenues, said First Deputy Mayor Andrew Frank. That would provide a minimum five-cent reduction in property taxes. Since the revenue is based on the casino's performance, Frank said, the city's share could grow.

To allow an eight-cent reduction, the parlor would need to produce about $25.4 million a year in revenue. That's what the city is forecasting within five years.

If all those if's come to pass, a city resident paying taxes on a $200,000 assessment would see his or her property tax bill drop from $4,536 to $4,376, a $160 savings.

Thoughts?

Posted by Jamie Smith Hopkins at 9:56 AM | Permalink | Comments (9)
Categories: Property taxes
        

This is the flip side of the Homestead Credit, which caps annual property tax increases. When home prices are skyrocketing, your taxes reflect only part of that rise. But you'll be catching up with the unpaid part of the increase later when prices stagnate -- and even when they drop. (It's only when your property assessment and your tax burden equal out that your tax bill figure stays put.)

As Larry Carson reports, "a house that jumped 50 percent in value when it was reassessed in 2005, for example, would take 10 years to reach full value if the annual cap is 5 percent or less, as it is in 15 of Maryland's 24 jurisdictions." His article notes that "virtually all" of the 700,000-plus property owners recently reassessed will have a bigger tax bill this year.

Carson, property tax reporter extraordinaire, reports in another story that Baltimore City's reassessed neighborhoods saw a big increase in taxable values even as some parts of the state declined:

While appraisals were nearly flat statewide for property overall - and even dipped in the more prosperous suburbs - values for homes in the third of Baltimore that will receive the notices rose 21.4 percent since their last assessment in 2005.

State assessors said home values rose 9.7 percent in eastern Baltimore County, 5 percent along the U.S. 40 corridor in Harford County, and 2 percent in the reassessed area of Carroll County. Home values dropped 4.2 percent in Anne Arundel, 7 percent in Howard and 16.3 percent in Montgomery County.

Think your reassessed value is wrong? You can appeal.

Read a How-to from the end of '07 on property tax appeals or go to the state's appeal page for information.

Looking for tax information specific to your community? Go HERE for homestead caps across Maryland and HERE for local property tax rates (as of July 1, 2008).

Posted by Jamie Smith Hopkins at 1:00 AM | Permalink | Comments (6)
Categories: Homestead Property Tax Credit, Property taxes
        

The city will send letters to residents in the next two weeks. Exactly how many will receive the letter is not yet clear, but a Dixon spokesman said it will likely be shy of 2,000.

The city expects the refunds will cost between $250,000 and $300,000. It was not clear Thursday how the city will pay for that unexpected expense.

Posted by Jamie Smith Hopkins at 9:05 PM | Permalink | Comments (0)
Categories: Homestead Property Tax Credit, Property taxes
        

But Tim Wheeler reports today that a significant number of landlords appear to be getting the benefit of the homestead tax break:

A spot check by The Sun of about 90 homes listed online for rent in Baltimore and Howard counties found that 1 in 3 is identified in state records as the owner's principal residence. That means the owners of those rental properties claim to be living there, potentially allowing them to get a Homestead Tax Credit they don't deserve.

State officials say "there's no easy way to check" who's honestly qualifying for the credits, Wheeler reports.

I know some of you folks out there are very interested in this issue. What do you think the state ought to do?

Posted by Jamie Smith Hopkins at 1:12 PM | Permalink | Comments (2)
        

This calculation, called the "constant yield tax rate," is a popular one for those frustrated that reassessments mean higher tax bills. I've already received two emails this morning pointing out that Baltimore's rate would drop from $2.268 for every $100 in taxable assessed value to $2.079 if city leaders go with the constant yield rate.

All the counties' rates would decrease, too. That's what happens when the assessable base expands.

As the state notes: "If a jurisdiction plans to set a tax rate higher than the constant yield rate, the jurisdiction must advertise the tax increase and hold a public hearing before setting the tax rate for fiscal 2009." (Fiscal 2009 begins July 1.)

If my math is right, the constant yield rate is truly constant -- no adjustment for inflation. Governments always see that as a cut because they say it means less in the way of services. City tax protesters, on the other hand, have argued that the revenue increases from property taxes have been well above inflation in recent years.

Property taxes are bound to be an issue this year as the city considers changing its tax structure. (Click HERE for an earlier post on the city's blue-ribbon tax reform committee.)

Meister, who ran for city council last year, said in an email on the subject: "The 2.079 rate is an 8.33% cut from the current rate of 2.268. We get an 8.33% cut by simply following what the state says. There is no need for changing the homestead tax credit, creating blue ribbon committees, legalizing gambling, or raising income taxes!"

Posted by Jamie Smith Hopkins at 9:59 AM | Permalink | Comments (3)
        

He can't help but notice that his notice urges him to apply within 60 days, and he saw a reference in the Maryland code that failure "to provide the requested information within 30 days from the date of a request shall result in a dwelling being designated as non-owner-occupied for purposes of the Homestead Property Tax Credit."

C. John Sullivan Jr., director of the state Department of Assessments and Taxation, says it really, honestly and truly is 2012 -- for everyone who bought their house by Dec. 31, at least. After that date, new home purchasers have six months to apply.

Sullivan said the state will send out a series of reminder letters to those in the owning-by-'07 crowd who haven't applied. He said he meant it when he told homeowners not to panic.

"When tax bills go out July 1 in the various counties, no one's going to lose their homestead credit because we do not have an application," Sullivan said.

"But the response has been unbelievable," he added.

The department has already received six duffel bags worth of applications by mail, and he expects the online tally will hit 10,000 by Monday.

Posted by Jamie Smith Hopkins at 10:01 AM | Permalink | Comments (0)
Categories: Homestead Property Tax Credit, Property taxes
        

The industrious John Fritze, who got an early copy of the report, reports today that the change "could cost many city homeowners thousands more a year."

If all of the panel's short-term recommendations were adopted, the rate would be cut to $2.017 per $100, which would still be the highest in the state. Officials say the reduction could be made within two years. ... A proposal to lift the annual cap on the increase in assessments on principal residences, known as the Homestead Tax Credit, from 4 percent to 10 percent is likely to be among the most controversial of the panel's ideas. It would cost taxpayers $24.2 million, the report says. That money, in turn, would be used to reduce the tax rate by about 4 percent.

Even with a reduced rate, that plan would force many residents to pay significantly more if their home values continued to climb as they have in the past several years. Under one scenario presented by the committee, the owner of a $300,000 home that increases in value by 25 percent every three years would pay thousands more in taxes.

If I understand the recommendations correctly, the plan would seem to be better for homeowners in a low-appreciation housing market and worse in a high-appreciation one. And it would be better overall for small landlords, who don't get the homestead cap anyway. (This doesn't take into account a proposed increase to the income tax rate to 3.2 percent from 3.05 percent, since I can't easily factor in that effect.)

But -- as a smart co-worker pointed out -- many homeowners are taxed on much less than their full assessed value right now because all those big increases during the housing boom were capped at 4 percent a year. In other words, it'll take some time to "catch up." That means plenty of folks would see 10 percent increases a year for a while if values don't plummet.

Well, Wonk readers? What do you think? The report is being pitched as "ready for public comment" rather than a done deal.

Posted by Jamie Smith Hopkins at 9:37 AM | Permalink | Comments (10)
Categories: Homestead Property Tax Credit, Property taxes
        

 Sun photo 

If you have a house, you have a property tax bill. Any day now, a third of Maryland property owners will be getting letters about a reassessment of the value that helps determine that tax.

You may have it in hand already, if your mail person is swift: The state Department of Assessments and Taxation sent the 728,185 notices out on Friday. The parts of the Baltimore area that are being reassessed this time 'round are northwestern Anne Arundel; the middle section of Baltimore City; the north and middle parts of Baltimore County; northeastern Carroll; the middle part of Harford; and both southern and western Howard. (You can find maps HERE.)

There's always some anger and frustration when new assessments hit, but the odds of furious screams are much higher in this time of slumping sales and soft prices. Why, you might wonder loudly, doesn't your new assessment reflect the fact that prices are stagnant or in some cases falling?

Continue reading "How-to Monday: Assessments and appeals" »

Posted by Jamie Smith Hopkins at 4:00 AM | Permalink | Comments (8)
Categories: Homestead Property Tax Credit, How-to Mondays, Property taxes
        

As Carson reports, "a little-noticed change in Maryland's property tax laws has converted this protection from an automatic benefit to one that each homeowner must apply for -- although most homeowners will have five years to file the paperwork."

The new law is intended to identify ineligible property owners who are illegally taking advantage of the caps, but critics say it is an overreaction that could put homeowners at risk of higher taxes.

Failure to apply for the tax credit, which is limited to a taxpayer's primary residence, can be costly. Maryland's Homestead Tax Credit law puts a 10 percent limit on the amount of a home's increased value that can be taxed each year, and many jurisdictions have lower ceilings.

Here's the deal: If you already own a house, you'll get a notice to apply with your next assessment letter. A third of homeowners will get letters within the next 30 days; everyone else will get them a year from now or two years from now, since the reassessment cycle is a three-year one.

The story notes that people have "until Dec. 31, 2012, to apply, except for those who buy homes after Dec. 31, who must apply within 180 days of the purchase."

Posted by Jamie Smith Hopkins at 11:28 AM | Permalink | Comments (0)