Louis Schechter had a what-the-heck moment when he opened his property-tax bill. Why did it go up when his assessed value was down?

"I appealed my assessment and the city did lower it from $244,000 to $154,800, which is much more in line," he wrote in an email. "However, last year I had a city credit of $2875, but this year I only got a credit of $629. The proportions are way off, and I can’t find the formula as to how they calculate the credit."

This question pops up every July as tax bills arrive -- at least since the market went from boom to bust. The answer in Schechter's case, and in every other "bill up, assessment down" situation I've seen, is that this is the way the homestead property tax credit works.

In fact, I wrote about this last July, so I'm going to reuse the explanation (ever-so-slightly tweaked) rather than typing up a nearly identical version from scratch. (But not for the entire rest of the post. Scroll down to the bottom for information on what to do if you can't afford your bill.)

Here goes:

The homestead credit caps your bill by preventing your taxable assessment -- the amount of your property assessment you're actually taxed on -- from increasing more than a certain percent each year. That ranges by jurisdiction in Maryland from zero to 10 percent. In Baltimore and Baltimore County, it's 4 percent.

As long as the tax rate doesn't change, that effectively caps the increase in your tax bill by the same amount.

But here's the rub: Say you bought a city home in 2000 when its assessed value was $100,000 and watched the value skyrocket to $200,000 in 2005. Now the assessors say it's worth $170,000. Will you see a tax decrease? No. Because you're only paying on about $160,000 of that value -- $100,000 increased by 4 percent each year through 2012.

And if tax rates stay unchanged, you'll keep paying 4 percent more a year until you catch up with your full assessed value, either by dint of time, more property-value drops or both.

That's not the only homestead-credit complexity that confuses the heck out of people.

New buyers who move in partway through the fiscal year -- which runs July 1 through June 30 -- pay taxes for that partial year as if they were the previous owner, inheriting that person's homestead credit if there was one. So it's not unusual for a new homeowner's taxes to jump a lot on his or her first July 1 in the property. That homeowner won't be eligible for the homestead tax break until the following July.

Also, keep in mind that big renovations can affect your tax bill even if you have the homestead credit. That's another "whaaa?" moment for homeowners.

Ah, that was a refreshing trip one year back in time. Welcome once more to July 2012.

I checked out Schechter's bills, and the increase in property tax was exactly what I expected based on how the homestead program works.

What makes this extra confusing is the bills, at least the ones online, don't tell you the amount of assessment you're paying on after credits -- just your total assessment. So you'll need to break out the calculator if you want to verify that everything is accurate.

But it's worth doing. Because sometimes the bill is wrong. Another homeowner whose assessment hadn't changed saw her taxes rise last year because her homestead credit was taken away by mistake.

Here's how to calculate whether your homestead credit amount makes sense. Look at your city (or county) tax amount -- not the tally that includes state tax -- and subtract your city (or county) homestead credit, if you're not already looking at the net.

Next, multiply by 100 and divide by your jurisdiction's tax rate, which should be on the bill. (Last year's rates by jurisdiction are here). It's 2.268 in Baltimore.

Voila: You have the amount of assessed value you're actually paying taxes on.

Repeat the process for last tax year.

If you received a homestead credit on both bills, the difference between last year and this year should be 4 percent -- if you're in the city or Baltimore County, that is, since both places set their homestead cap at 4 percent. Here's the list of caps by jurisdiction.

If the math doesn't work out and you're sure you calculated it right, that's when you might try calling the state Department of Assessments and Taxation to see what's up.

Knowing how much of your assessed value you're actually paying taxes on is also helpful if you're thinking of appealing that assessment. Then you'll know the amount you'll need to drop below to see a tax drop, too. More here on the various sorts of appeal options.

By the way: Don't forget to apply for the homestead credit on your primary residence if you haven't already. You've been grandfathered in if you've owned your home for years, but you'll lose it starting next tax year if you don't beat the Dec. 31 deadline.

If you can't afford your bill, see if you qualify for a different tax break -- the homeowners' property tax credit for low- and moderate-income owners. The deadline to apply is Sept. 1. The application must be made annually.

Got a housing news tip or experience to share? (Or just want to tell me something?) Email me at jhopkins@baltsun.com.