Maryland’s Laws on Property Taxes and How They’re Calculated

Understanding Maryland’s laws on property taxes is crucial for homeowners and prospective buyers alike. Property taxes are one of the primary sources of revenue for local governments in the state, funding essential services such as public schools, roads, and emergency services. Here’s a breakdown of how property taxes are calculated and regulated in Maryland.

Assessment of Property Value
In Maryland, property taxes are based on the assessed value of the property. The State Department of Assessments and Taxation (SDAT) is responsible for determining the assessed value through periodic assessments. Generally, properties are reassessed every three years. This process involves an evaluation of the property’s market value, taking into consideration recent sales and improvements made to the property.

Tax Rates and Calculation
The property tax rate in Maryland varies by county and municipality. Once the assessed value is determined, local government entities, including counties and municipalities, set their respective tax rates. This rate is typically expressed in terms of dollars per $100 of assessed value. To calculate the property tax owed, the following formula is used:

Property Tax = (Assessed Value / 100) × Tax Rate

For example, if a property is assessed at $300,000 and the local tax rate is $1.00 per $100 of assessed value, the property tax owed would be:

Property Tax = ($300,000 / 100) × $1.00 = $3,000

Homestead Tax Credit
Maryland offers a Homestead Tax Credit to help prevent sharp increases in property taxes for primary residences. Under this program, the increase in the taxable assessment for a property is limited to a specified percentage each year, currently set at 10%. To qualify for this credit, homeowners must file an application with the SDAT and meet certain criteria, including occupancy and residency requirements.

Exemptions and Additional Tax Credits
Aside from the Homestead Tax Credit, Maryland has various exemptions for certain groups, such as senior citizens, veterans, and individuals with disabilities. For instance, the County Property Tax Credit for Disabled Individuals reduces the property tax for eligible individuals, while the Veterans' Tax Exemption allows qualifying veterans and their surviving spouses to receive a property tax exemption on their homes. Homeowners should explore these options to potentially reduce their tax burden.

Payment and Appeals
Property taxes in Maryland are assessed annually and are typically due in July. However, homeowners have the option to pay in quarterly installments. If a property owner disagrees with the assessed value, they have the right to appeal. The appeal process begins with filing a request with the local Board of Property Review. If the result is still unsatisfactory, further appeals can be made to the Maryland Tax Court.

Conclusion
Navigating Maryland’s property tax laws requires an understanding of how properties are assessed and taxed. By being aware of the available tax credits, exemptions, and the appeals process, homeowners can make informed decisions and manage their property tax obligations effectively. Staying informed on local regulations and any changes in legislation can also lead to significant savings in property taxes over time.