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Maryland Homestead Tax Credit Application

This article applies only to Maryland residents, though other states may institute policies such as this one as property tax revenues start to fall because of the housing slump.

In Maryland, we have a Homestead Tax Credit that “limits the amount of assessment increase on which an eligible resident homeowner actually pays county, municipal and State property taxes each year.” This protects people from huge spikes in property taxes every three year assessment cycle. When we bought our home three years ago, we didn’t immediately begin paying taxes on our assessed value (the purchase price). The assessment value gets slowly phased in, 10% for State assessments each year, until it reaches the total assessed value.

Two years ago, the Maryland General Assembly enacted legislation that would require homeowners to submit a one-time application for the Homestead Tax Credit. This checks that each family receiving the Homestead Tax Credit was actually supposed to receive it. You’re supposed to only receive it once, on your principal residence, per person or married couple. They check primary residence by confirming income tax and motor vehicle record in the state. This is to prevent people from claiming the credit on second homes or rental properties, for which this law was never designed for.

Well, our three year assessment cycle came due and we had to re-apply. The process took two minutes and will save me the county and state taxes on $108,943 of my assessment. Translate that into taxes and you’re talking close to $3,000 a year! I don’t think there’s a single action in the world that has an ROI like that!

Maryland produced this straightforward Homestead Tax Credit FAQ [3] but it’s pretty clearly laid out in the assessment notice they send you. You don’t need to apply until they send you your assessment but you can do everything via their online form [4]. You will need the paper application form so you can get your Real Property Account # and an Access Number.