Will Your Baltimore Property Taxes Increase?
Understanding the new Homestead tax Credit
I have answered the text and calls of my clients who live in Baltimore about this subject so I figured I should make a blog for anyone who may be seeking information. The news is that the Council approved a measure increasing the city’s Homestead Tax Credit cap from 4% to 5%.
“Will this cause my property taxes to go up?”
The answer depends on your property assessed value and how much it has increased over time. Let’s explore what you need to know.
What is the Baltimore Homestead Tax Credit?
This credit is designed to protect homeowners from large spikes in property taxes each year. As property values rise, the credit limits how much of that increase can be used to calculate your property taxes each year.
How does the new homestead tax credit rule work?
It’s easier for me to give you an example.
Suppose your home’s taxable assesment last year was $300,000.
This year the city reassesses your property at $330,000. Thats a 10% increase in value.
Under the previous 4% cap:
Your taxable assessment would have increased to only $312,000.
The remaining increase would have been temporarily shielded by the Homestead Tax Credit.
Under the New 5% cap:
Your taxable assessment can increase to $315,000.
That means an additional $3000 of your home’s value becomes taxable this year.
While you are not paying taxes on the entire increase, more of your home’s assessed value is now subject to taxation than it would have been under the previous rule.
Does this mean baltimore property taxes are going up?
Not necessarily.
The impact will vary from homeowner to homeowner.
Several factors influence your final tax bill, including:
Your home’s current assessed value
How much your assessment increased
Baltimore City’s property tax rate
Any tax rate reduction approved by the city
Whether your property qualifies for the Homestead Tac Credit
So, some homeowners may see little differences, while others (particularly those in neighborhoods experiencing significant appreciation) may see a larger portion of their home’s value become taxable sooner.
Why did Baltimore city make this change?
City officials have stated that the change is part of a broader effort to balance homeowner tax relief with the city’s revenue needs. At the same time the city increased the Homestead Tax Credit cap, it also approved a reduction in the property tax rate (one cent), with a promise of larger ones to follow in the coming years.
Does this affect homeowners across maryland?
No.
This change applies only to owner occupied homes located within Baltimore City. Although the Homestead Tax Credit cap is a Maryland wide program, each county and Baltimore City can establish its own local cap within limits allowed by state law.
Now what do I do?
If you own a home in Baltimore City, now is a good time to:
Review your most recent property assessment notice
Confirm that your property is enrolled in the Homestead Tax Credit program
Compare your current assessment to previous years
Estimate how future assessments increases may affect your property taxes
This will help you avoid surprises. Homeowners make better decisions when they understand the policies that affect their biggest investment. If you have questions about your home’s assessment, property taxes, or the Baltimore housing market, don’t hesitate to reach out.
Erika Walker
Maryland Realtor®
443.468.0757 (c)
443.233.6156 (o)
Realty One Group Excellence
9433 Common Brook Rd Ste 201
Owings Mills, Md. 21117