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New State Application Requirement For Montgomery County Maryland Property Tax Credits

Posted July 25, 2022 at 2:11 PM

Business & Tax, Maryland Property Tax News, News & Events, Real Estate

This month, Montgomery County will begin sending their annual Real Property Consolidated Tax Bills which will have important changes for all homeowners living in the County.  The consolidated tax bills reflect property taxes imposed by the State and the County, based on the property’s assessed value.

Since 1999, Montgomery County has provided local homeowners an Income Tax Offset Credit (ITOC) authorized under Maryland Tax-Property Article § 9-221, a State law which enables local governments to provide tax credits to help offset real property taxes if the local government’s income tax rate exceeds 2.6%; which Montgomery County’s income tax rate does.  This ITOC credit appears as a $692 credit on property tax bills for all owner-occupied residential properties.     

Recent changes to the enabling State law (HB 1200, 2020) which take effect for the current property tax levy year commencing July 1, 2022, now require County residents to file an Application for the State’s Homestead Property Tax Credit before the County can grant an ITOC credit.  The current year’s tax bill will still reflect this $692 credit and homeowners will have until May 1, 2023, to file their Application through the Maryland State Department of Assessment and Taxation (SDAT).  The loss of the ITOC credit may come as a shock to homeowners who have received the $692 credit for years, without ever having requested or applied for it.  It may also be a little confusing because the SDAT administers an entirely different credit, the Homestead Property Tax Credit, which is based on a homeowner’s income, whereas the ITOC credit administered by the County is not, but both require the submission of the State’s Homestead Property Tax Credit Application.   

Nevertheless, beginning with the current property tax year for an owner-occupied residence to retain Montgomery County’s $692 ITOC credit, the homeowner must file a State Homestead Credit Application with SDAT by May 1, 2023, otherwise the ITOC credit will be removed for the current tax year and the additional $692 will become due.  Thereafter, the ITOC credit will not appear on future year tax bills until the Application is submitted.  Additional information about the County’s ITOC credit program and the State’s application requirements are available on Montgomery County’s ITOC website.  

Taggart (Tagg) Hutchinson is an attorney in Miller, Miller & Canby’s Real Estate practice group, where he focuses his practice in commercial real estate transactions, financings and land development matters, as well as real estate litigation and property tax appeals, and providing settlement services. He is licensed to practice in Maryland and Washington, DC. To learn more contact Tagg via email.

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