Buyers in city get relief

April 24, 1994|By Ellen James Martin | Ellen James Martin,Sun Staff Writer

A new law allowing Baltimore City homebuyers to pay their property taxes semiannually may help cash-strapped buyers purchase homes and draw more buyers to the city, real estate brokers say.

"It could tip the scale in quite a few cases," said William F. Cassidy, sales manager for Long & Foster Real Estate Inc.'s downtown office in Fells Point.

The city law would allow a homebuyer to pay eight months of property taxes at settlement rather than the usual 14 months. The city would charge a fee for the privilege.

The General Assembly last year started to allow jurisdictions to require less money at settlement to ease the burden of Maryland's closing costs, among the highest in the region.

The burden is especially heavy in the city, where the tax rate is about twice that of the surrounding counties. The City Council passed the law earlier this year, and Mayor Kurt L. Schmoke is expected to sign it tomorrow.

The change takes effect immediately for first-time buyers and Jan. 1, 1995, for all buyers.

A similar law, restricted to first-time buyers, was passed in January by the Harford County Council. It will go into effect July 1.

"We've been aggressively working for this law for years," said Roger Mainster, president of the Harford County Association of Realtors. Realtors had pushed for the past three years for the state law.

On the purchase of a $100,000 house in Harford County, a homebuyer could reduce his out-of-pocket cash needs at the settlement table by more than $600, said Marge Eikenberg, an agent for the Bel Air office of Prudential Preferred Properties.

That would be enough to influence some buyers to choose properties in Harford County rather than Baltimore County, Mr. Mainster predicted. Tax rates and home prices in the two counties are roughly comparable, but Baltimore County has yet to pass an ordinance on semiannual tax payments.

"The townhouse prices are very similar between the two counties. And Harford County is just 10 minutes more in drive time [from downtown]. It's also less congested," said Mr. Mainster, a Harford County appraiser who believes his county will gain a slight edge in home sales with the new rule.

Likewise, more homebuyers straddling the fence between Baltimore City and Baltimore County could chose the city, Mr. Cassidy said.

Property taxes are higher in the city, but the new ordinance could reduce the settlement-day cash needs of the buyer of a $100,000 home by $1,200, Mr. Cassidy said. And he said Baltimore City has lower prices on comparable homes.

Maryland's closing costs are among the highest in the nation and they take an especially big bite at the settlement table for Baltimore taxpayers, said Councilman Martin O'Malley, a 3rd District Democrat and sponsor of the city ordinance. "Closing costs are one of the big, big factors when first-time homebuyers choose their first home," he said.

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