Montgomery Co. saves $2.9M, targets ineligible tax credits

Montgomery County Montgomery County’s finance director said the county has saved $2.9 million in home tax credits since 2012 by identifying rental housing and second homes that were incorrectly receiving the credits.

The savings and the potential to save $3.4 million annually were outlined in a memo this month from Finance Director Joseph Beach to Councilmember Nancy Navarro. Navarro chairs the Council’s Government Operations and Fiscal Policy Committee, which set up the county’s Property Tax Compliance Office in 2012.

Navarro said that office has since worked to identify the correct tax status of residential properties. The office found many properties from absentee owners that were receiving tax credits — the county’s Homestead Credit and Income Tax Offset Credit — that only owner-occupants are eligible for.

According to a Council press release, the office has identified nearly 4,900 ineligible accounts, based on its review of rental housing lists maintained by the Department of Housing and Community Affairs. The office cross-checked those lists with the State Department of Assessments and Taxation to see which accounts were improperly claiming the credit.

The Homestead Credit limits an owner-occupied property’s taxable assessment to a 10 percent increase each year. The Income Tax Offset Credit for 2014 is $692.

County staff says the continued tracking of tax status could mean added additional revenue of $3.4 million per year — though the Council press release claimed the office’s ability to correct the status of more properties depends on the state’s ability “to keep pace in updating its records.”

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