Property values for 779,573 Maryland property owners just went up by 20.6%. What will that mean for tax bills in the coming year?
The Maryland State Department of Assessments and Taxation (SDAT) has just completed appraisals for some of the more than 2 million property accounts in the state. The state divides properties into three groups, and owners get their assessment notices once every three years.
According to SDAT’s news release, for the fifth year in a row, all 23 counties and Baltimore City have seen residential property values go up.
“This is a good indicator that the market remains strong and growth is steady here in Maryland,” said SDAT Director Michael Higgs in a press release.
The state provided a map of the areas that have been sent assessment notices. The maps for the entire state are available online. There are maps for each county that show which areas are scheduled for reassessments.
While seeing that property values have gone up by 20.6% may seem jarring, Rich Madaleno, Montgomery County’s chief administrative officer said the appraisals take effect in a three-year cycle, and “any increase is phased in over three years in thirds.”
For example, said Madaleno, “If your property went up by 21%, the value would be spread out 7% a year over three years.”
For those concerned about the increased property tax that comes with a rise in property value, tax credits can blunt the effects. A Homeowner’s Tax Credit, which is based on owner’s income and other eligibility factors, sets a limit on the amount of property taxes that are owed.
There is also a Homestead Tax Credit, which caps the increase at 10% per year. Some local governments have capped the annual tax increase even lower.
“Montgomery County has a 10% cap,” said Madaleno. To get that credit, “You must have a homestead credit application on file with the state in order to qualify.”
Those tax credits are only allowed for “an owner-occupied principal residence,” Madaleno said. For example, a homeowner in the District of Columbia who owns a residential property in Maryland as an investment property can’t claim the Homestead Tax Credit for the Maryland home.
While no one likes paying higher taxes, “for most people, their residence is their largest economic asset — and that asset just grew,” Madaleno said. “This shows again the strength of the local real estate market, not just in the county but around the state.”