Real estate, such as a house or cooperative in Maryland, is eligible for the homestead exemption. You must own and live on the property in order to protect it. Similarly, if you permanently attach your constructed house to the land, it will be treated as real property and eligible for the homestead exemption.

Explaining the Homeowner’s Tax Credit.

Exemptions from property taxes known as “homesteads” protect homeowners from paying a certain amount of money or a set percentage of the home’s worth. This is because “homestead” exemptions only apply to one’s principal house and not to secondary or investment properties.

In order to benefit from the deduction, you must really make the house your permanent residence. The value of a residence may be free from property taxes in certain states at a flat rate, whereas in others just a portion of the value may be exempt.

Let’s assume for the sake of argument that your house is valued at $200,000 and that your property tax rate is 1%. Your annual property tax bill would be $2,000. In contrast, if you qualified for a homestead tax exemption of $50,000, the taxable value of your property would be reduced to $150,000, and your tax payment would be reduced to $1,500.

The Homestead Property Tax Credit was enacted by state law to assist homeowners in mitigating the financial impact of sharp rises in the assessed value of their primary dwelling. Annual increases in tax assessments cannot exceed a predetermined cap thanks to the Homestead Credit. Taxable assessment increases in every county and city in Maryland are kept below 10% annually.

According to the Department of Assessments and Taxation, the Homestead Credit technically does not cap the market value of the land. Therefore, it’s a reduction in the following year’s assessment if the rise from the previous year was more than 10% (or whatever lesser limit was passed by local governments).

For purposes of the State property tax, the credit is decided by the ten percent threshold, and for purposes of local property tax, the threshold is ten percent or less (as defined by local governments).

In other words, if a homeowner’s assessed value increases from $100,000 to $120,000 in a single year, the additional $20,000 in market value is not subject to property tax. The new valuation would be $110,000, a rise of 10%. The price tag of $120,000 is $10,000 more than that of $110,000. If you owe taxes on $10,000, you might use this credit to reduce those costs. A tax credit of $104 would be given if the tax rate was $1.04 per $100 of assessed value ($10,000 100 x $1.04).

Read more: Common Tax Strategies for Couples 

What You Need to Do to Apply Maryland Homestead

A legislation passed in 2007 mandates that all homeowners submit a single application to demonstrate eligibility for the benefit, with the goal of preventing incorrect awarding of the credit on leased or numerous properties of a single owner.

Terms

If the following criteria were satisfied during the prior tax year, the tax credit will be awarded:

• No new owners have taken possession of the property.
• No revision in the zoning classification sought by the owners, resulting in a rise in property value.
• The land was not put to an entirely new purpose.
• There was not a huge discrepancy between the new evaluation and the old one.

The home must also be the owner’s primary residence, and he or she must have lived there for at least six months of the year preceding July 1 of the credit-eligible year. An exception to this rule would be for an owner who was temporarily unable to live in the home due to illness or the need for special care. Only the primary dwelling qualifies for a tax credit for a given owner.

Homeowners who move out of their primary house in order to demolish it and build a new one on the same lot, or who move out in order to make major renovations to the property, may still qualify for the Homestead Exemption if they meet two requirements:

In the first place, the homeowner(s) must have lived on the property for at least three complete tax years prior to the demolishment or the start of the major renovations.
Second, the new house or significant renovations must be finished before the end of the next tax year to the year in which the demolition or demolition and substantial upgrades began.

Standing to Appeal

If you’ve been turned down for a Homestead Tax Credit but think you should be entitled to one, you may appeal the decision by calling the Homestead Tax Credit Program’s central office at one of the numbers below. Within 30 days of receiving notice of a final refusal of a Homestead Tax Credit from the Central Office, the property owner may file an appeal with the local Property Tax Assessment Appeal Board.

You may be able to get a homestead tax credit if you own and live on eligible property in Maryland. The credit is designed to help offset the impact of sharp increases in assessments on your primary dwelling. To qualify, the property must be your primary residence, and you must have lived there for at least six months of the year preceding July 1 of the credit-eligible year. There are other requirements as well, so be sure to check with the Maryland Department of Assessments and Taxation for more information.

What is eligible property in Maryland in regards to the Homestead Credit?

Eligible property in Maryland in regards to the Homestead Credit includes real estate, such as a house or cooperative, that is owned and lived in by the taxpayer. The property must be the taxpayer’s primary residence in order to qualify. Additionally, if the house is permanently attached to the land, it will be considered real property and eligible for the Homestead Credit.

What is defined as a house in Maryland? What if I own a mobile home on my own land?

A house is defined as a structure that is occupied as a dwelling by one or more persons. This includes a mobile home that is permanently affixed to land that is owned by the taxpayer.

How do I apply for the Homestead Credit in Maryland?

To apply for the Homestead Credit in Maryland, you must complete and submit a Homestead Credit Application (form PPTC 030) to the Department of Assessments and Taxation. The application must be postmarked by June 1st and received by July 1st of the year for which you are claiming the credit.

What information do I need to provide on the Homestead Credit Application?

When completing the Homestead Credit Application, you will need to provide your name, Social Security number, date of birth, address, and telephone number. You will also need to provide the address of the property for which you are claiming the credit, as well as the date you acquired the property and your Maryland county of residence.

Read more: How to Use Tax Software? 

How hard is it to fill out the PPTC 030?

The PPTC 030 is a pretty simple form. The first page is mostly personal information about you, and the second page asks some questions about the property you’re claiming the credit for. The instructions for the form are pretty straightforward, and there’s even a spot on the second page where you can indicate whether you need help filling out the form.

What if I move after I’ve already applied for the Homestead Credit?

If you move after you’ve already applied for the Homestead Credit, you will need to notify the Department of Assessments and Taxation. You can do this by completing and submitting a Change of Address Form (form DAT-141).

What if I move out of my house for a year or more?

If you move out of your house for a year or more, you will need to reapply for the Homestead Credit when you move back in. You can do this by completing and submitting a Homestead Credit Application (form PPTC 030). You ask, “What if I sell my house?” If you sell your house, you will need to notify the Department of Assessments and Taxation. You can do this by completing and submitting a Home Sale Notice.

Is the homestead credit related to property taxes at all?

The homestead credit is not related to property taxes. However, if your property tax bill is $2,000 and you qualify for a homestead tax credit of $1,000, your new property tax bill will be $1,000.

Do I need to contact my county office at any point in this process? While you are not required to contact your county office, it may be helpful to do so in order to get more information about the homestead tax credit and the application process.

What if I’m denied the homestead tax credit?

If you are denied for the homestead tax credit, you can appeal the decision by calling the Homestead Tax Credit Program’s central office. Within 30 days of receiving notice of a final refusal of a homestead tax credit from the central office, you may file an appeal with the local property tax assessment appeal board.

Do I need a lawyer to appeal to the local property tax assessment appeal board?

No, you do not need a lawyer to appeal to the local property tax assessment appeal board. However, you may want to consult with a lawyer to discuss your options and to get advice on how to best present your case.

Read more: What You Need to Know About Taxable Income

What other tax deductions are there for homeowners in Maryland?

Some other tax deductions for homeowners in Maryland include the mortgage interest deduction, the property tax deduction, and the energy-efficient home improvement deduction.