Owners Urged To Research Homestead Tax Credit

BERLIN — The deadline to ensure to file an application for the Homestead Tax Credit, which sets a cap on the amount of property tax increase for which a homeowner is responsible, expires Dec. 31 and many in Worcester County aren’t aware they haven’t applied while many others are scrambling to meet the deadline.

The Homestead Tax Credit sets limits on tax increases for homeowners on the assessed value of their property. For example, the state of Maryland sets its Homestead cap at 10 percent, meaning a homeowner can only be taxed on 10 percent of the increase in assessed value regardless of the amount of increase.

Maryland’s counties can set their Homestead caps at anywhere from zero to the state maximum of 10 percent and most do so. For example, Worcester County a few years back lowered its Homestead cap from five percent to three percent, while Wicomico last year lowered its cap from 10 percent to five percent.

The cap protects homeowners somewhat from paying extreme increases in property tax rates provided the property in question is their primary residence. It can represent a significant savings, but the homeowner must apply for it and ensure they are current in their application or they will not be eligible and could be taxed at the maximum amount of increase.

“We can’t stress enough how important it is for resident homeowners to make sure they have filed an application and have been approved,” said State Department of Taxation and Assessment (SDAT) Worcester County Director Robert Smith this week. “It’s a simple application process, but homeowners need to make sure their application is on file by Dec. 31 or they will be out of luck for the next year. There is an appeal process, but it’s more complicated than simply making sure they’ve applied.”

To determine if one has already filed for the tax credit, go to the department’s website at www.dat.state.md.us and click on the Real Property page for the specific address. At the bottom of the page for one’s property is the Homestead application status and the date the application was approved. However, it is up to the homeowner to check the status to see if an application is on file.

“We want everybody who is eligible to make sure they get this credit and we’re willing to bend over backwards to help them, but the clock is ticking,” said Smith. “We’re not in the business of deceiving or tricking anybody. We want everybody to get the credit, but they have to take action to make sure they’re signed up.”

The law requires a property owner to live in a residence for at least six months plus a day in order to qualify for the Homestead Tax Credit. Because of the resort nature of much of Worcester, the issue is always a significant one in the county. For example, Smith said roughly 78 percent of all residential properties in Worcester are not eligible for the cap, fueled largely by the 91 percent in Ocean City. In Worcester, there are about 15,500 residential properties that are primary residences, compared to a whopping 67,000-plus that are not.

“The one thing that has not changed is the number of properties that are not primary residences and, therefore, not eligible for the Homestead cap,” said Smith. “For those that are, they really need to check their status and make sure they have applied and have been approved. It could represent a significant difference on their property tax bill, but they have to make sure they have applied. If they don’t know for sure, or they aren’t computer savvy and can navigate the website, they can call this office to find out (410-632-1196).”