Black Friday Sale: Get 75% off a digital subscription
The Real Estate Wonk

Don't forget to apply for this property-tax break

Getting a break on your bill from the Homestead Property Tax Credit? If you're among the 150,000 or so who haven't yet applied for the credit, a new(ish) one-time requirement, then make sure you get that form in by the end of the year.

Those who miss the deadline will lose their credit in the 2013 tax year, which begins July 1 of next year. Poof, gone.

The good news for confused homeowners who do manage to miss out is that you can at least get your credit restored for the 2014 tax year -- the amount you would have gotten if you had applied on time, rather than starting from scratch.

And if you're not sure whether you have applied (or are worried that your application might not have been processed), you can now check the status online. Look up your address on the state's Real Property Data Search page and scroll to the bottom of the page to see if it notes whether the application is in and approved.

The homestead credit acts as a ceiling on tax increases for primary residences, and it's calculated in a way that has allowed many homeowners to accrue a big break.

The statewide program keeps the amount of assessed value a homeowner is taxed on from increasing more than 10 percent a year, with lower caps in most jurisdictions. The limit is 4 percent a year in Baltimore and Baltimore County, for instance.

Here's an example:

Say you bought your Baltimore home in 2000, when it was assessed at $100,000, and qualified for the homestead break starting in 2001. (You have to wait a full tax year to be eligible.) By 2006, the housing bubble pushed the value to $200,000.

But you paid taxes on just $126,500 of that assessment, thanks to the 4 percent cap. The homestead credit picked up the rest.

Since then, your assessment has dropped and now stands at $170,000. The amount you're actually taxed on, the piece that keeps going up 4 percent a year, is $153,900. So you're still getting a break from the homestead credit -- just not as big of a break as you got a few years ago.

Some folks have seen their assessed values drop to the point that they aren't getting a reduction in their bill from the homestead credit anymore. Robert E. Young, director of the state Department of Assessments and Taxation, says this is the group that's most skeptical about turning in an application -- complete with Social Security number -- because those folks don't see the point.

Young says homeowners have called in and said variations on this theme: "Even if I do apply for this coming year, I'm going to not receive any homestead credit?"

"We'd say, 'Yes, that's correct. ... However, the market will turn around one day and you'll want to get your homestead credit as quickly as possible in the future,'" Young said.

The point of the application is to cut down on the problem of homeowners collecting homestead credits on rentals and other properties that aren't their primary residence. Assessment staffers are using the Social Security numbers to cross-check that the supposed primary residence is the same address as the one listed on income tax returns and drivers' licenses.

Copyright © 2015, The Baltimore Sun