As homestead tax credit deadline approaches, outreach intensifies

State senator from Baltimore proposes extending deadline into 2013

  • Gwendolyn Shelton, left, president of the Matthew Henson Neighborhood Association, gives instructions to Carver Vocational Technical High School students, from right, Ashley Brock, Naquandra Wallace, Jasmin Streeter and Latyra Florius, before going door-to-door in the neighborhood. The students are helping remind homeowners to apply for the Homestead Tax credit before the year-end deadline.
Gwendolyn Shelton, left, president of the Matthew Henson Neighborhood… (Kenneth K. Lam, Baltimore…)
December 23, 2012|By Steve Kilar, The Baltimore Sun

Maryland homeowners could lose out on hundreds of dollars in tax bill savings if they miss a deadline that's a week away.

Many may not realize they must sign up for the Homestead Tax Credit, which saved the average Baltimore homeowner more than $1,000 in the most recent tax year. To receive the credit in property tax bills starting this July, homeowners must sign up by Dec. 31.

"When you say the words 'tax credit' to some homeowners, it doesn't really resonate what they're getting out of it," Baltimore City Councilman Nick Mosby said.

That's why Mosby, other politicians and community leaders are spreading the word that homeowners must submit the one-time Homestead Tax Credit application — or prepare to part with a potentially substantial sum. There's even a legislative proposal to extend the deadline, which has been in place for nearly 51/2 years.

"It's always been something that's just been there," Mosby said of the homestead credit, which limits the amount a primary residence's tax assessment can increase each year. The limit varies by jurisdiction. In Baltimore and Baltimore County, for instance, there's a 4 percent cap — meaning the credit prevents a home's assessment from increasing by more than 4 percent each year.

Mosby's right — for about 30 years, the homestead credit was just there.

It was applied automatically at the time of purchase to any homeowner's principal residence. Property owners never had to give the credit a thought; it was taken care of for them.

In 2007, though, the General Assembly decided the automatic nature of the process was a problem. Too many ineligible property owners were receiving the credit — on second homes or investment properties, for example. The Baltimore Sun reported last year that hundreds of Baltimore property owners were receiving the credit on multiple properties. The state ultimately revoked credits worth $730,000 in response to that report.

All of those undeserved deductions were robbing the state's treasury of revenue, legislators said. So the new law wiped the homestead tax credit slate clean.

Marylanders who bought a home before 2007, most of whom long received the credit, have until Dec. 31 to submit an application before their credit is taken away in the tax year that begins July 2013. Those who purchased a home since the legislation's passage receive a homestead application by mail from the State Department of Assessments and Taxation.

The new process is intended to eliminate ineligible homes from the credit's registry. But it also eliminates the credit for eligible homeowners who fail to submit an application.

"I'm not one of these people who's going to miss an opportunity to save money," said Joseph Hawkins, who has been in his Bethesda home since 1984. But, he said, he has no idea whether he's been receiving the credit all these years, because when he looks at his tax bill he's focused on the bottom line.

Had a friend not mentioned the homestead application, Hawkins said, he and his wife might have missed the deadline.

He thinks the state has done a poor job notifying homeowners of the need to apply.

"What's the incentive for the state to make me aware of this?" Hawkins said.

After all, he added, every dollar the credit saves him is a dollar the state loses.

Since 2007, the state has mailed every homeowner multiple notices of the deadline, said Robert E. Young, Maryland's director of assessments and taxation. For most homeowners, the notices were tucked into assessment notices.

In West Baltimore, many residents have not heeded these notices, said Gwen Shelton, president of the Matthew Henson Neighborhood Association, which has launched a door-to-door campaign to get homeowners registered.

Through the tax department's website, anyone can see whether a homeowner's application for the credit has been processed. This allows Shelton to make certain that everyone in her neighborhood has submitted an application.

Shelton enlisted students at the neighborhood's Carver Vocational-Technical High School to look up, address by address, every home in the neighborhood. The students record every address not registered for the credit, and Shelton sends volunteers to the door with a blank application.

"It can amount to a lot of money that people don't have," said Shelton, explaining the reason for her grassroots campaign. "It looks like a lot of people haven't filed."

About 25 percent of city homeowners who received the homestead credit in the most recent tax year have not applied, Young estimates.

At most, there are 1.47 million owner-occupied homes statewide that are eligible for the homestead credit, he said. As of mid-December, about 940,000 applications have come in from across the state.

As assessments decrease, the value of the credit declines, too. Since property assessments dropped the past few years, only 482,000 property owners are expected to see any financial benefit next year — far fewer than in the past, he said.

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