Make sure you understand your property-tax bill

August 27, 2012|Jamie Smith Hopkins

Two reasons you should fully understand your property-tax bill: to make sure you're not getting overcharged -- and to make sure you're not getting undercharged.

Really.

Baltimore's finance department has a "billing integrity" unit for ferreting out problems, such as property owners collecting property tax credits to which they're not entitled. Officials have pursued such owners for the back taxes, plus interest, plus penalties. (And the penalties were increased statewide this year for people wrongly collecting homestead credits meant for owner-occupiers.)

Invariably, property owners say they had no idea -- no idea they weren't eligible or even no idea that they were getting a credit at all.

And even though I'm sure some folks really are credit scofflaws, I'm also certain that others are doing it unwittingly. So many people let their mortgage servicers take care of the payment and don't scrutinize the bill.

The homestead credit now requires an application, but for years it was granted automatically to anyone who ticked (or let a real estate professional tick) the "principal residence" box on a new-purchase form filed with the state. You can see how this contributed to the problem. Sometimes it was ticked in error. Sometimes the owner moved out later and didn't think (or decided not) to tell the state that the home was now being rented.

Owners who bought before 2008 don't have to apply until the end of the year, so there could still be significant numbers of people accidentally-or-on-purpose receiving homestead credits they don't qualify for.

And on top of that, some Baltimore homeowners have been wrongly given other sorts of tax credits as a result of government mistakes.

As colleague Scott Calvert and I reported in April, the city notified five homeowners getting historic renovation credits and one couple receiving a new construction credit that they had to pay up for the past years of breaks, pronto. (At least one of the homeowners was later offered a less-pronto repayment plan.)

Those two credits require an application. None of the owners applied. The historic credits were added to the five properties' tax bills as a result of errors by the state Department of Assessments and Taxation, and the new construction credit was erroneously transferred from the first owner, who qualified, to the couple who purchased from him and weren't eligible.

Contributing to the confusion is that those two credits (along with some other tax breaks) were labeled simply as a "special credit" on city tax bills. And the homestead credit was called an "assessment credit."

This year, the city bills were redesigned so the homestead credit appears with its proper name attached and more detail is offered about special credits. All owner-occupiers, for instance, should see a notation on their bills that says, "The special credit includes [whatever the amount is] in Targeted Homeowners Tax Credit" -- the new-this-year break designed to phase in a 20-cent reduction in homeowners' tax rates by 2020.)

But nothing has the power to perplex like a tax bill. Catherine Parks, who got hit with a $7,630 back-tax bill for the unasked-for new construction credit, looked at the newly designed bill sent out in July and thought it wasn't as clear and simple as she'd been led to believe it would be.

"I didn't find it to be any clearer, really," said Parks, an attorney. "I kind of threw up my hands in frustration."

That's because she had no idea what the "Targeted Homeowners Tax Credit" was. She did some research and decided it was probably the break that Mayor Stephanie Rawlings-Blake had earlier proposed, but she said she wasn't certain. After her earlier experience, she was worried about credits she and her husband hadn't applied to get.

"I just think they need to be very specific on something as important as this," Parks said.

Finance officials seemed befuddled by this befuddlement.

"Our message below the Net Tax Amount line clearly states what the special credit is," Harry E. Black, the city's finance director, said by email. "The credit was $103 and the note clearly indicates that it’s for the Targeted Homeowner's credit."

Bottom line: You can always call your local jurisdiction's finance department or the state assessors if you're not certain about a credit on your bill and whether you should be getting it. If you're not eligible, better to know now rather than three years down the road, when the total will have grown.

The main line for the state Department of Assessments and Taxation is 410-767-1184, with contacts for the agency's local offices listed on this web page.

And, of course, call if you think you're not getting a credit to which you're entitled. It does happen.

Got a housing news tip or experience to share? (Or just want to tell me something?) Email me at jhopkins@baltsun.com.

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