Tax tipsters

A vigilant accountant and other Maryland residents set out on a crusade to make sure that all homeowners pay their fair share of property taxes

December 07, 2008|By Jamie Smith Hopkins | Jamie Smith Hopkins,

The house was as vacant as could be - a boarded-up blight on the neighborhood. Why, Matt Gonter wondered, was the owner getting a tax break for supposedly living there?

Hoping to make a difference in his Baltimore community, Gonter alerted the tax assessors. And there it might have ended. Except he thought he'd see if the owners of other all-but-abandoned homes in Patterson Park were wrongfully benefiting from the state's homestead property tax credit, too. Then he checked on vacant homes in nearby neighborhoods. And on city homes listed for rent.

That's how one determined accountant managed to find - by his tally - nearly 1,000 Baltimore houses owned by people who appeared to be getting tax breaks they didn't legally deserve.

"It just became a crusade," Gonter said.

The scale of that crusade is unusual, but he's not the only citizen asking the state Department of Assessments and Taxation to investigate potential scofflaws. Property taxes are a sore subject for many, particularly in the city, which has a tax rate at least double that of Maryland's counties. There's nothing like someone paying less than they should to get folks steamed.

The homestead credit puts a ceiling on property tax increases for people who live in the homes they own. That means it can be worth hundreds or even thousands of dollars a year for a single house. In Baltimore, the cap is 4 percent - far less than the annual increase in home prices earlier in the decade.

All told, 1.4 million Marylanders are getting just over $1 billion in breaks from the program.

Concerned that a sizable number of landlords and others with multiple homes were unfairly benefiting, the Maryland General Assembly passed a law last year requiring all homeowners to apply for the credit. The state, which will notify every homeowner over the next three years about applying for the credit, will use the personal information they provide to verify that they're not double-dipping.

Some 450,000 applications have come in, but for most Marylanders, the deadline isn't until 2012.

Gonter, who says some of the faux owner-occupants near him were paying $3,000 a year less in property taxes than he was, thinks the state will lose a lot of money in the meantime if no one is auditing the records.

"I don't see why they just don't do it themselves," he said. "It's not rocket science, what I'm doing."

The state Department of Assessments and Taxation says it does do homestead-credit checks. It investigates whenever an owner wants the tax bill sent somewhere other than the house getting the break, said Robert E. Young, who's in charge of the homestead program. Workers visiting neighborhoods to reassess homes also knock on doors and take note when it's a tenant who answers.

And the state, which believes the new law will help it check every homeowner, also looks to see whether properties with credits are listed or licensed for rent.

"The law makes sure that over a period of years, we're going to check every one of these properties rather than having someone alerting us to the problem," Young said. Sometimes it's a local government agency that takes the bull by the horns. Howard County's finance department analyzed records this spring and discovered that the owners of about 1,000 Howard rentals were getting homestead credits on those properties, said finance director Sharon Greisz. The county expects to collect $1.5 million from those property owners, including as much as three years of back payments.

And Baltimore officials said last month that they mailed bills to owners of 200 city properties who they believe are improperly receiving property tax breaks, while the state said it will send letters to the owners of about 1,400 other city properties in hopes of saving almost $2 million.

State officials say tips have mounted in recent years after news reports highlighted the tax credit. For example, several state lawmakers had claimed the credit last year on properties that were not their primary residences, a Baltimore Sun investigation found.Gonter believes residents concerned about absentee landlords or angry about tax rates shouldn't hesitate to step in themselves. If all real estate investors and other people who are not owner-occupants paid their fair share, he said, "maybe you can justify a tax decrease across the board."

He has tapped information available to anyone, cross-checking the state's property look-up site - which notes whether a home is registered as a principal residence - against such online resources as a list of vacant properties in the city. He goes to Craigslist to see which houses are advertised for rent. He has found proof that owners are out-of-state landlords by the tenant complaints they've filed with the court system.

He's been at it for a year.

"I just think it's a total drop in the bucket," Gonter said. "There's got to be tens of thousands of these properties being cheated on."

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