Homestead Exemption for Maryland Real Estate

The State of Maryland recently enacted legislation, effective January 1, 2008, requiring an owner of a principal residence to submit a homestead application in order to receive any homestead credits. Because this is a new law and the State of Maryland only released the specifics of its implementation just prior to the January 1, 2008 effective date, a lot of confusion exists concerning its affect on the homeowner. I have flushed out some additional details that you may find helpful:

a. New Homeowners: New homeowners may apply for the homestead exemption at the time of their settlement but will not be eligible for the homestead exemption until they have resided in the property for one calendar year. Furthermore, the homeowner will not actually see the credits appear on their tax bill until the following fiscal year (i.e., July 1 through June 30). For example, if one were to purchase their principal residence in January 2008, they will not qualify for the exemption until January 2009 and will not receive the credits until the July 2009 tax bill. They will not receive a "recapture" credit for the period between the first anniversary of settlement and the beginning of the fiscal year in which the credits first appear. Unlike DC homestead applications where we submit the applications with the recording package the title company, would submit the Maryland applications to SDAT in Baltimore rather than with the recording package to the local jurisdiction.

b. Existing Homeowners: Existing homeowners will have until December 31, 2012 to apply-otherwise, they will lose their homestead credits. Existing homeowners whose properties are subject to reassessment should have received information with their tax assessment notice (not tax bill) that explains how to apply online. That information also includes the homeowner's Real Property Account Number and an "Access Number". Existing homeowners who received an assessment notice will have until April 1, 2008 to file the homestead application electronically. If the home is not subject to reassessment for this year, the homeowner cannot apply electronically, but may still apply using the written application. In that instance, the State of Maryland will accept the "early" application but will not process it until reassessment of the subject property. Irrespective of when they apply for their homestead credits, once a homeowner has submitted the application, however, they will not have to reapply upon reassessment of their property.

c. For additional information, you may check the State Department of Assessments and Taxation website at: https://sdathtc.resiusa.org/homestead/.

For existing homeowners, you will have until December 31, 2012 to apply for this credit, even if you received your assessment notice this year. The April 1, 2008 date represents an artificial deadline to apply electronically only.

If you currently receive a homestead credit on your bill and apply after April 1, 2008, you must do so by mail using the written application. Furthermore, for those who just received an assessment notice and are already receiving the homestead credits, if you fail to apply before the issuance of the July 1, 2008 tax bill, you will continue to receive those credits, but you will also receive notices reminding you of your failure to apply. The State of Maryland is consciously not advertising the December 31, 2012 deadline in an effort to encourage homeowners to apply early.

The bottom line is that if you receive your assessment notice and have internet access, there is no reason not to apply electronically by April 1, 2008, since it takes less than 60 seconds to do! Nonetheless, failure to do so will not result in loss of the homestead credits until the statutory deadline of December 31, 2012.

Clear as mud? If you need help understanding what Maryland thinks is crystal clear, call me and I'll help you understand how to ensure your homestead credit continues.

Bethesda Real Estate