Homestead tax break disappears -- by mistake

April 06, 2012|Jamie Smith Hopkins

Plenty of Marylanders have received homestead property tax credits they weren't eligible for. But Michele Barley has the opposite problem -- she qualifies and isn't getting it.

The Baltimore resident had a homestead credit that knocked $912 off her bill last tax year. This tax year? Zilch. Up went her mortgage payments as a result, and she wrote in an email that her calls to try to restore her credit had gotten her nowhere.

"I am a single mother and cannot believe that I cannot get someone to help me with this," said Barley, who lives in the home as the tax break requires.

Now, lots of people have watched their homestead credit shrink to zero as property assessments followed the housing market down. That's the nature of the break, which keeps the amount of increased assessment you're paying taxes on from rising past a certain point each year -- 4 percent in Baltimore. If you're paying on $150,000 of your assessment and the state decides your home is now worth that amount, there's nothing for the homestead to shield.

So when Barley emailed me, I figured that was the culprit. But no -- her $111,200 assessment hadn't changed at all. And since she was paying on just $72,038 of it last tax year, her credit this year ought to be about $836, I figured. What had happened?

Owen C. Charles, deputy director of the state Department of Assessments and Taxation, investigated and came back with the answer almost immediately: The agency's system kicked her out of the homestead program by mistake.

The problem originally cropped up last tax year when the system, which automatically strips credits from accounts when homes change hands, misinterpreted a transfer that left Barley the sole owner of the property as a sale.

"The 2010 credit was reinstated in September 2010, which should have triggered the July 1, 2011 credit to [be] computed automatically," Charles said by email. Somehow, that didn't happen.

He said his staff would notify the city to send a revised tax bill with the credit applied. That means a refund should be coming Barley's way.

"Words cannot express how thankful I am," she said.

Glad it worked out! It's a reminder to always scrutinize your property tax bill and stick with it if you're sure something's wrong. (If you're not sure, I'm happy to help you try to figure it out.)

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