Beginning next week, more than 600,000 property owners in Maryland will receive reassessment notices from the state assessments and taxation department and will be facing an average increase of 9.5 percent starting July 1.
That cold fact is hardly welcome news to homeowners who might have assumed that a slowing real estate market would translate into a lower property assessment when the state tax notice arrived.
Marylanders whose home or other property was reappraised by the state this year will see the 9.5 percent assessment increase TC for each of the next three years, slightly below the 10 percent cap on annual increases adopted by the 1990 state legislature.
On Monday, the state assessments and taxation department plans to mail reassessment notices to 600,000, or a third, of the property owners statewide. Local jurisdictions use those assessments in calculating property taxes.
The average homeowner may find more tax relief if he lives in one of the counties that have adopted caps lower than 10 percent.
Baltimore, Kent and Harford counties, for example, already have enacted caps of 4, 5 and 6 percent, respectively. Other jurisdictions, such as Baltimore and Howard County, are considering caps in that range. Homeowners there will not have to pay local property taxes on increases above those caps.
Calvert County, a jurisdiction which benefits from taxes generated by the huge Baltimore Gas and Electric Co. Calvert Cliffs nuclear power plant there, has a zero percent ceiling, meaning assessments won't rise despite what happens elsewhere in Maryland.
Lloyd W. Jones, state assessments and taxation director, said he fears many people believe that the national economic downturn will mean lower property assessments.
"With the softening real estate market, the public is going to believe higher assessments are out of line," he said. "It's the market that sets the value of a piece of property."
Although the number of sales dropped 10 percent during the past year, real estate prices increased during the last three years, Jones said. He said the increases totaled to an average of 35.2 percent.
In the past year, real estate prices have leveled off in many areas, although waterfront properties in places such as Anne Arundel and Baltimore counties continue to rise in value, he said.
His department released data on the reappraisals yesterday in an attempt to reduce the sting of next week's assessment notices and explain the new caps. The department reappraises a third of the state every year and phases in increases over a three-year period.
The notices being mailed Monday have been checked against 1990 sales to ensure accuracy. Most of the assessments have been correct, although 600 Essex area residents will be receiving a second notice in the next few weeks informing them that their reassessments are 10 percent too high and will be corrected, Jones said.
The average assessment increase announced yesterday varied from place to place.
In Anne Arundel, where the more rural southern region was reappraised, those homeowners would have had to pay taxes on a 13.6 percent assessment increase next year. The county, however, has proposed a 10 percent cap on such annual increases, following the state lead.
Baltimore, whose southern portion was reassessed, posted only a 4.7 percent annual increase, slightly above the 4 percent cap city officials are considering.
And Baltimore County, whose eastern part will be receiving the notices, saw a 7.8 percent increase, almost twice the local 4 percent ceiling.
Every county and city has until Jan. 1 to adopt the state 10 percent cap or a lower one. The cap would apply to all properties, regardless of where they are in the three-year reassessment cycle.
If every county adopted a 10 percent cap, for example, 234,000 Maryland homeowners with rapidly rising property values would be affected. Under that scenario, about $25 million would be lost in property taxes throughout Maryland next year, with a large chunk of that loss in Montgomery County alone, said Ronald Wineholt, associate director of the state assessments and taxation department.
The actual figure will be greater than $25 million because some local governments already have adopted lower caps, he said.