BERLIN – When reassessment notices arrived for property owners in a large section of Worcester County last week, a seemingly innocuous questionnaire regarding Homestead Tax Cap eligibility was included that might otherwise be discarded, but local property owners should not ignore the document at the risk of overspending on property taxes.
The State Department of Assessment and Taxation (SDAT) reassesses property values in Worcester County every three years on a rotating basis and this year the south end of the county and a large portion of West Ocean City were reassessed.
Included in the reassessment notice this year is a questionnaire to be used to determine if a given property is the primary residence of the owner, therefore making them eligible for the Homestead Tax Cap, which sets a limit on the amount of property tax increase regardless of the boom in assessment values.
The state of Maryland sets its Homestead cap at 10 percent and local jurisdictions are allowed to set their caps at any level under that or even at zero if they so desire. Last year, the County Commissioners lowered the local cap from 5 percent to 3 percent, ensuring resident property owners are liable for a maximum 3-percent increase in their property taxes regardless of the increase in their assessment.
However, ignoring or misplacing the questionnaire could result in SDAT assuming the property in question is a second home or vacation home, and thus making the owner ineligible for the protections afforded by the Homestead Cap. Robert Smith, director of SDAT for Worcester County, this week warned resident property owners in the area recently reassessed to fill out and send in the questionnaire or risk paying considerably more in property taxes this year.
“They need to make sure they open it, fill it out and send it in,” he said. “This is extremely important. Not applying for this credit may result in an increase in one’s real estate tax bill.”
Smith said the questionnaire is a one-time requirement to help establish which properties in the county are primary residences and which are second homes or vacation homes. For example, about 78 percent of all properties across the county are not owner-occupied, meaning they are not eligible for protections under the cap. In Ocean City, the number of non-resident properties soars to around 90 percent, according to Smith.
Because of the proliferation of second homes in Worcester and across much of the state, SDAT’s state office in Baltimore has taken over the task of determining which properties are owner-occupied and therefore eligible for the cap.
“Baltimore is taking over the task because it has just gotten so big,” said Smith. “There are a tremendous number of people claiming eligibility for the Homestead Cap because of the potential savings on their tax bill. Unfortunately, many are trying to take advantage of the cap that aren’t eligible for it, which is why the state office is stepping in and taking over the investigations.”
Next year, property owners in Ocean City will receive the questionnaire followed by property owners in much of the north end of the county the following year.