The Senate gave preliminary approval to a bill that would repeal a controversial new law requiring Maryland homeowners to apply for a property tax credit they have been getting automatically until now.
But the ultimate prospects for the repeal measure, which comes up for a final vote next week, are murky. The head of the House committee considering a similar bill says she sees no reason to retreat on a Homestead Tax Credit reform intended to weed out scofflaws.
The Senate voted 41 to 4 to repeal the application requirement, which sailed through the General Assembly unanimously last year.
State officials and legislators have been peppered with questions and complaints from constituents about having to apply for the homestead credit since December, when the Department of Assessments and Taxation included information about the new requirement with reassessment notices mailed to 700,000 property owners across the state.
The credit limits how much a home's assessment can increase in any given year, a cap that can reduce the owner's annual property tax bill by hundreds or possibly even thousands of dollars as real estate values rise. State law limits the assessment increase to 10 percent a year, but most Baltimore area jurisdictions have set even lower caps.
The credit, under which owners pay tax on less than the full value of their home, is estimated to be worth nearly $1 billion to state property owners this year.
The credit has been practically automatic because it gets attached to properties when they change hands. Buyers get it by signing an affidavit saying they intend to live in the home. Many are unaware they were getting it - and many also stray unwittingly, when they buy another home and rent out their old one without notifying the government.
But some apparently misstate their intentions to live in a property they're buying in order to claim the credit, officials say.
Sen. Edward J. Kasemeyer, the Senate majority leader and sponsor of the repeal measure, has said that homeowners, especially the elderly, were confused and upset about the new application requirement - and the possibility they might lose a valuable tax credit that many were not even aware they were receiving.
"We think people should be paying ... for investment homes," he said. "Only our problem is that many people have overlooked the notice, that it hasn't been done in the proper way. We think there's a better way for the department to do this, simply."
