Tax Assessment Appeals and the Homestead Credit

If your property was reassessed by the State Department of Assessments and Taxation (SDAT) on January 1 of this year, you have until February 11 to get your appeal submitted.  Use this simple online form to get your appeal filed in the most efficient manner possible: http://assessmentappeals.dat.maryland.gov/start.aspx.  Basics about the process can be found here: http://www.dat.state.md.us/realproperty/Pages/HomeOwners-Guide.aspx.

For those of you curious to know whether or not it is worth filing an appeal, here are a few simple guidelines:

1.  If the assessed value exceeds the fair value of your property you may want to file an appeal.  If not, it may be best not to try to appeal because the information you provide could be used to your detriment in the next billing cycle.  This is especially important with rental properties where the SDAT will apply a multiplier to your gross annual rents, depending on where the property is located, and even if you cannot sell your property for anything close to what that formula calculates, you will not get your assessment to be reduced below that amount.  That lease could be used to help them come up with a higher value in the next assessment cycle, or could even be used by the local municipality to file an appeal with the SDAT to get your value increased to what they believe it should be, something they can do once every three years.
2. If you recently purchased your property in a non-distressed, arms-length transaction (i.e., not a foreclosure, short-sale or purchase from a relative) and the purchase price was less than the new assessed value, you can file an appeal and your settlement statement and/or appraisal will be good documentation to support the value you paid.  This often happens with properties purchased later in the prior calendar year as that sale would not have been considered in coming up with the value as of January 1.
3. Other than that, the best tack to take is to show that the per-square-foot value of three or four recent neighborhood comps in similar condition is significantly less than your new assessed psf value.  This can happen especially if a house with much nicer finishes than yours sells, in which case pictures of the inside of your house will be strong evidence to support that you should be valued at the psf vale of “x” less-expensive house instead of “y” fully-renovated house.
4. There are professionals who can handle your appeal for a portion of what they save you, which is a win/win because your savings will exceed the fee and few appeals are very successful without spending a good amount of time preparing the initial appeal and then spending a long day in a face-to-face hearing (level 2 of the process).

If your property was not reassessed on January 1 of this year but you feel your assessed value exceeds the fair value of your property, you can still appeal.  Within 60 days of a new purchase between January 1 and June 30 you can file an appeal for the tax year beginning July 1.  Once July 1 has passed, the appeal will not be considered until the following year.  If you did not recently purchase your property, appeals filed before January 1 will be considered for the tax year beginning July 1, and those filed after January 1 will not be considered until the following tax year.  For example, and appeal filed today for a property which has been owned more than 60 days and was not reassessed on 1/1/16 will be considered for the tax year beginning 7/1/17.

Of course, this is all mitigated by the Homestead credit for owner-occupants, which limits the increase in the County portion of your tax bill (most all of it) to only 2% per year in Anne Arundel County.  As long of you have been in your house for a year by 1/1/16, this should be in effect for you, so your assessment can increase, but the actual tax increase will be capped at 2% each year.  If you bought in 2015 you’ll take the full hit, but it will at least be phased in equally over 3 years, and then you’ll be locked in going forward.  This is a great reminder to check your Homestead Credit status at http://sdat.resiusa.org/RealProperty/Pages/default.aspx.  Once you find your property your HC status will be at the bottom of the page and should say “Approved” and have a date.  If it does not and you filed an application in the past, you’ll want to contact the SDAT to get this corrected as it could have a huge financial impact.  If you never filed an application it will be too late for this assessment cycle, but you’ll want to get one filed so you can at least limit the increases going forward.

If you have any questions about filing an appeal of the assessed value of your Severna Park property, questions about the Homestead Credit or questions about anything else related to living in Severna Park, please email me at eric@www.severnapark.com or give me a call at 410-804-8432.

Eric McPhee

The Severna Park Team of Cummings & Co Realtors