Homestead Tax Credit Rate To Stay The Same In Berlin

Homestead Tax Credit Rate To Stay The Same In Berlin
Photo by Chris Parypa

BERLIN– Town officials opted to keep the homestead tax credit the same despite plans earlier this week to change it.

In an email poll on Tuesday, the Berlin Town Council voted to keep the homestead tax credit rate at 5%. While the council had voted on Monday to adjust it to 3%, information made available to them Tuesday showed the change would have a $50,000 financial impact on the town’s revenues.

“That was not taken into consideration on Monday night because we didn’t know about it,” Mayor Zack Tyndall said.

During Monday’s council meeting, Finance Director Natalie Saleh presented officials with information regarding the homestead tax credit rate. In Maryland, the homestead credit limits the amount of assessment increase on which a property owner will pay taxes if the property is the owner’s principal residence. Each year, the town has to tell the state if its homestead rate—which is currently 5%—is being adjusted. Saleh on Monday reviewed the figures associated with the current rate as well as those associated with lower and higher rates. The rate cannot exceed 10%.

Currently the 5% rate reduces the town’s assessments by $39,579. Saleh on Monday said dropping the rate to 3% would reduce the town’s assessments by $40,371.

While it’s reducing the municipality’s income, the homestead program is helping residents. Saleh said that an example would be a home previously assessed at $100,000 that was now assessed at $120,000. If the homeowner’s increase is capped at 5%, as it has been in Berlin, the assessment level they’d be responsible for would be $105,000. In that case, they’d have a tax credit of $122.25.

She said a reduction to 3% would reduce the town’s income but would result in savings for residents. In that case, the newly assessed $120,000 home would get a credit of $138.55.

“The lower the percentage, the higher the gap, the bigger the credit (for residents),” she said. “The credit goes against the revenue we receive. It goes back to the customers.”

Based on those figures, the council voted 4-0 to adjust the rate to 3%. Less than 24 hours later, however, Tyndall said the council was advised that the actual financial impact to the municipality would be $50,000.

“I didn’t think it was the intent of the council to adjust revenue to that level,” he said.

As a result he sent an email poll to the council members. They voted unanimously to leave the rate at 5%. Tyndall said the rate could be revisited in the future.

About The Author: Charlene Sharpe

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Charlene Sharpe has been with The Dispatch since 2014. A graduate of Stephen Decatur High School and the University of Richmond, she spent seven years with the Delmarva Media Group before joining the team at The Dispatch.