An Introduction – Conduit Street

Property tax is the largest source of local revenue for county governments in Maryland. Counties rely on this revenue to fund schools, public safety, infrastructure, public health and other essential services.

Property taxes have a direct or indirect impact on almost everyone, whether residents rent or own. But the assessment process is often confusing. Here is a primer.

Maryland Property Tax Assessment Overview

Article 15 of the Bill of Rights of the Constitution of Maryland requires uniform valuation and taxation of all real estate. Additionally, state law requires that all taxable property be assessed based on its fair market value.

The State Department of Assessments and Taxation (SDAT) is responsible for property valuation in Maryland. Assessments conducted by the state, rather than local governments, help assure taxpayers that the assessment agency is providing an objective and unbiased analysis.

Maryland divides more than two million real estate accounts into three groups, each assessed once every three years by the state Department of Assessments and Taxation (SDAT). There are 24 local assessment offices in the state, one in each county and in the city of Baltimore.

As property values ​​increase, the increase is gradual in equal increments over the next three years. The three-year process and its three-year phase-in schedule deliberately provide a cushion to taxpayers during periods of rapid and significant increases in property values.

Determination of fair market value

Assessments are certified by SDAT to local governments, which turn into property tax bills by applying the appropriate property tax rates. Appraisals are based on an assessment of the fair market value of a property. An estimate is an estimate of value.

There are three accepted approaches to market value:

  • The commercial approach
  • The cost approach
  • The income approach

Although differing in the method of calculation, each approach is designed to indicate the fair market value of the property. Learn more about these approaches here.

Property tax relief

SDAT administers several property tax relief programs that provide needed relief to eligible property owners. Additionally, many counties and municipalities also offer additional tax breaks.

Homestead property tax credit

The Homestead property tax credit essentially acts to cap assessments of owner-occupied residences so that a resident’s property tax burden does not increase too significantly from the previous year. It provides consistency for taxpayers who live and own their homes.

Each county and municipality in Maryland is required to limit taxable assessment increases to 10% or less each year. However, nearly every county has exercised its authority to lower its cap, providing security for homeowners beyond what the state requires.

Technically, the Homestead loan does not limit the market value of the property as determined by SDAT. Instead, it’s a credit calculated on any assessment increase over 10% (or the lower limit set by local governments) from year to year.

The Property Tax Credit Program for Homeowners

The Property Tax Credit Program for Homeowners, known as the Circuit Breaker Program, provides tax relief to eligible homeowners by setting a limit on the amount of property taxes owed based on their income. The initial tax bill for July includes applications received and approved before May 1. Eligible residents who have already paid their property taxes and submitted an application by Oct. 1 can expect a refund from their county finance office. In fiscal 2021, 42,272 eligible homeowners received an average credit of $1,451.

Several counties and municipalities also offer additional homeowner credits, which provide additional tax relief. If a resident is approved to receive state credit, they will automatically receive any local credit for which they are eligible.

Tenant Property Tax Credit Program

The Tenant Property Tax Credit Program also provides tax relief to eligible tenants who pay a high monthly rent relative to their total income. The majority of recipients of this credit are Marylanders age 60 or older. The program is also accessible to people with 100% disabilities and tenants under 60 with at least one dependent child. This credit has a maximum value of $1,000. In fiscal 2021, 7,525 eligible tenants received an average credit of $446.

Evaluation calls

Property Assessment Appeal Boards (PTAAB) across the state hear property valuation appeals. There is a council in each county and in the city of Baltimore, all of which are supported by a central office and an executive director. Each council is made up of four or six members (three members and one or three alternates) who are appointed by the Governor for a term of five years.

The first calls for evaluations are carried out by the SDAT, which also carries out these initial evaluations. The PTAAB hears second-level appeals of SDAT decisions, and PTAAB decisions are appealed to the Maryland Tax Court. Further appeals can be made through the court system.

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