Soaring assessments spur tax relief drive

Low-income homeowners would get a larger break

General Assembly

April 06, 2005|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

State legislators are pushing for increased property tax relief for low-income homeowners - especially seniors - being buffeted by Maryland's rapidly rising home values.

The state Homeowners' Tax Credit Program, designed to aid a relatively small but vulnerable percentage of the population, is assisting fewer and fewer people because it is calculated in a way that penalizes residents of houses that are appreciating steeply. A bill that passed in the House two weeks ago and is before the Senate could help several thousand people at a cost of about $1.5 million next fiscal year.

"The assessment increases in Maryland were some of the highest in the nation," Del. John R. Leopold, a Republican from Pasadena who is one of the sponsors of the House bill, said yesterday. "It is imperative that we act to make this correction."

The number of homeowners' tax credits issued has plunged sharply, to 50,000 in 2004 from more than 78,000 a decade ago - and that decrease is coming as more people are feeling the pinch. More seniors have been calling the Baltimore City Commission on Aging and Retirement Education in the past year with concerns about property taxes, said executive director John P. Stewart.

The tax credit is applied to the first $150,000 of a home's assessed value. The income requirements vary by county, but in most cases people must be living on less than $40,000 with a total net worth below $200,000, excluding the value of their home.

Most who receive the credit are older than 60 and see their property tax reduced by about $820.

"For some of these people, that's what allows them to stay in their house," said Laura Foussekis, special assistant to the director for the Maryland Department of Assessments and Taxation.

Leopold says that more residents would qualify if not for a technical change to the law in 1995 that he said had the unintended effect of subtracting a more widely used tax break - a cap on assessment increases - from the $150,000 assessment limit for the homeowners' tax credit. He wants to return to the original method.

The cap keeps taxable property assessments from increasing more than 10 percent a year - or less in counties that have adopted lower percentages - regardless of the owner's income. Some properties have appreciated so much in the past few years that their owners no longer get both tax breaks.

Homes reassessed in January as part of Maryland's triennial process jumped 47 percent compared with three years before, an average annual increase of nearly 14 percent. A third of Maryland homes are reassessed each year.

An Annapolis homeowner who received a $910 credit in 2002 from the low-income program found herself ineligible the next year because her home's assessment doubled to $580,000, according to an example offered by the state Department of Assessments and Taxation.

The homeowner was one of 10,000 in the past two years who either lost the credit entirely or saw it reduced, the state said.

It is "a failing program," said Dick Strombotne, legislative director of the Maryland Federation of Chapters of the National Active and Retired Federal Employees Association.

"The fact that it hasn't kept up with the times means that it's helping fewer and fewer people stay in their homes," said Strombotne, 71, a Gaithersburg resident.

Del. Victor R. Ramirez, a Prince George's County Democrat who is another sponsor of the House bill, said assessments are "getting outrageous."

"People are looking for some type of relief," Ramirez said. "This, I think, will go a long way."

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