(June 5, 2015) There’s a program available in the state of Maryland to help low income homeowners afford to stay in their homes — it’s called the Maryland Homeowners’ Property Tax Credit Program. It’s been in existence for more than 35 years, but is not well known.
When it was first established, the tax credit was limited to seniors, but a few years later the program eligibility was expanded to include all homeowners who meet the income guidelines. However, the majority of the recipients of the tax credit do tend to be 60 or older.
The tax credit is based upon the amount by which the property taxes exceed a percentage of your income according to the following formula: zero percent of the first $8,000 of the combined household income; 4 percent of the next $4,000 of income; 6.5 percent of the next $4,000 of income; and 9 percent of all income above $16,000. If your combined household income is $16,000, your tax limit is $420. You would be entitled to receive a credit for any taxes above the $420. If your actual property tax bill were $990, you would receive a tax credit in the amount of $570 — this being the difference between the actual tax bill and the tax limit.
To qualify, applicants must report total household income, which means the combined gross income before any deductions are taken. Income from all sources must be reported including nontaxable retirement benefits such as Social Security. Additional requirements include the following:
• Applicant must own or have a legal interest in the property
• Property must be a principal residence and applicant must live there at least six months out of the year, including July 1, unless you recently purchased or are unable to do so because of your health or need of special care
• Have a net worth of less than $200,000 (not including the property)
• Have a combined gross household income of less than $60,000
The homeowners’ tax credit is not automatically granted, those interested are required to apply and disclose income annually. The deadline every year is Sept. 1, and the application is supplied by the Department of Assessments and Taxation. It is advantageous to apply by May 1 each year so that any credit due can be deducted before the initial July tax bill is issued. New applicants can visit the local assessment office or call 1-800-944-7403.
Additionally, a law enacted in 2000 by the Maryland General Assembly allows low-to-moderate income home purchasers to apply in advance for the credit before acquiring title to the property. The purpose of this program is to help reduce the amount of money needed at the time of settlement. You must apply at least 30 days before your expected settlement date to receive any credit due at the time of settlement.
— Lauren Bunting is a licensed REALTOR® and Associate Broker with Bunting Realty, Inc. in Berlin.