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MY HOUSE IS WORTH WHAT?

Nick Chirigos could hardly believe his eyes earlier this year when he opened the letter from the state telling him the new assessed value of his home. It had shot up nearly 60 percent from the last assessment he received in 2005.

"These increases are confiscatory and outrageous," said the Lutherville resident.

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Chirigos has already filed an appeal -- something he's had success with in the past. He built the 3,400-square-foot home in 1996, and it was assessed a few months later. A year later, the state re-evaluated the house and said it was worth $100,000 more, even though he had made no significant improvements to it.

"All I did was plant three rose bushes that cost me $45 -- and I dug the holes for them myself," he said. His successful appeal lowered the assessed value by $80,000. He's hoping for the same type of result this time.

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Across Maryland, many homeowners have felt a similar shock upon seeing their houses assessed at significantly higher levels. The news is particularly hard to take in today's real estate market, in which homeowners are hearing frequently about rising foreclosures and sagging sales. How is it possible for state assessments to climb when the market is falling?

There are generally two reasons for the seeming disparity.

First, although homes are sitting on the market longer, prices on average did not decline significantly last year. Statewide, home prices in Maryland fell just 1.1 percent in 2007 -- to an average of $359,375, according to the Maryland Association of Realtors.

Second, the state's valuations are always behind the current marketplace. Homeowners receive assessments in early 2008, but the valuations were done months earlier using figures from the past three years.

"We're charged with looking at the fair market value," said C. John Sullivan Jr., Maryland's director of assessments & taxation. "If a house sells for $300,000, in an ideal world our assessment will be at $300,000."

Some Realtors say they are hearing from homeowners who are upset over the new assessments.

"The conversations range from confusion to concern to just plain anger," said Jo Zuramski, who has been a sales associate at Long & Foster in Baltimore County for 22 years. "I just think this entire tax issue has come on the heels of so many expenditures for Marylanders. The sales tax went from 5 to 6 percent, the cigarette tax went up, and then there's the cost of gasoline and higher BGE costs."

Statewide, assessments were up an average of 33.3 percent over those notices mailed in 2005. Assessments varied by county: Howard County had the lowest increase at 24.3 percent, followed by Frederick County at 27.3 percent, Baltimore County at 32.7 percent, Anne Arundel County at 34.8 percent and Carroll County at 37.5 percent. Baltimore City saw the highest increase in the state at 75 percent.

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By comparison, home prices statewide rose about 15 percent in a similar three-year period. From December 2004 to December 2007, average sales prices rose from $302,084 to $347,209. State officials note that for this round of assessments, they took into account the fact that the market exploded in 2005, in which the average Maryland home sold for $363,125, and thus they gave more weight to home values in 2006 and the first half of 2007.

State workers assess one-third of the state every year, so each home is reassessed on a three-year cycle. There are 215 assessors who evaluate about 728,000 homes per year.

"Assessors have in their hand a worksheet that shows a property's land size, details of the structure on the land, the square footage, its building materials and what it was valued at three years ago," Sullivan said. "They are looking to see if any physical changes have been made to that specific property such as additions or improvements. They are also looking to see if there has been any significant change in the character of the neighborhood that would have a detrimental effect on the property's value."

How to appeal

Sullivan said the department has not seen a spike in appeals, or angry phone calls, this year, although exact figures were not yet available. He said anyone who questions an assessment should obtain the worksheet that assessors used in valuing a property; this can be obtained even without filing an appeal.

"Homeowners know the property better than an assessor can ever know the property," Sullivan said. "If there's a problem with the property that we can't see, we encourage them to advise us of that. Obviously some people say we're not listening to the news [of falling real estate markets], but we do look at the news and we also look at every property transfer in every county."

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Even if an assessment seems high, if it isn't higher than comparable sales in your area, then the chances of winning an appeal are not good, Sullivan said. For example, if your assessment went from $200,000 to $300,000 but houses similar to yours are selling for, say, $315,000, a successful appeal is unlikely. However, if your house has a characteristic that sets it apart from other comparable houses, then the state might agree to lower the assessment. Examples could include being located on a particularly busy street or having a basement that routinely floods.

Michael J. Bagliani, a Realtor with Gilbert D. Marsiglia & Co., is more familiar with the appeal process than he'd like to be. During the previous round of assessments in 2007, his three-bedroom house in Baltimore City's Cedarcroft neighborhood was valued at $467,000 -- a number he felt was much too high.

"I'm in the business so I have a pretty good idea of what the neighborhood is worth," he said. "And I had just sold a house across the street from mine for $448,000 and that house was superior to mine in several ways."

For example, Bagliani's house is all wood with no driveway or garage, while the house he sold is half brick, has a garage, is 350 square feet larger and has an additional full bath.

He and four of his neighbors, with his help, filed appeals online. All of his neighbors' appeals were accepted, while his was rejected. He's still not sure why. He then requested a hearing, where the state agreed that his valuation was too high; it was subsequently lowered to $400,000.

"I'm willing to give them the benefit of the doubt that it was just a bureaucratic snafu," Bagliani said. "In the long run it was fair enough."

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Substantiate the case

Real estate attorney Fred L. Coover, a managing partner at Coover & Barr, LLC in Columbia, said the assessments seem to be drawing more attention this year.

"What we see is property owners receiving tax bills based on assessments that no longer reflect the market values of their properties. In many cases the assessed values are greater than the market values, so they're being taxed on something they really don't have the benefit of," Coover said. "It's kind of understandable that people are up in arms."

When appealing, he said, the key is to substantiate your case.

"You do not want to just show up and say, 'My house is not worth that much,' you've got to prove it," he said. "Some people can handle that on their own and some should hire experienced counsel."

While the process might be fairly straightforward, filing an appeal is not something that the majority of people will pursue, said Iona Harrison, president elect of the Maryland Association of Realtors.

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"Those who are comfortable and reasonably well off will grumble and pay the increase," she said. "Even though the forms say you can appeal, the whole idea of going through that process is quite daunting."

Daunting or not, it's something that Lutherville homeowner Jeff Rupp plans to try. He purchased his 4,000-plus square-foot home in 2006 and his recent assessment values the house at about 2 percent more than he paid for it. Given the market conditions then and now, he's not buying it.

Rupp filed his appeal online and said the initial step was very simple and took no more than five or 10 minutes. The next step is to meet in person with an assessor.

"I guess when the appeal process moves along I would hope to gain a little bit better understanding of where they came up with the number," he said. "But I don't know if I'll agree with it."

ASSESSMENT APPEALS

Homeowners can appeal their assessments online at www.dat.state.md.us or by mail with the forms enclosed in the assessment (be sure to keep a photocopy). The deadline to appeal is Feb. 11. If the first appeal is unsuccessful, there are two more levels at which the case can be made again.

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HOMEOWNERS MUST APPLY TO RECEIVE TAX CREDIT

While rising assessments and a stalling real estate market are grabbing homeowners' attention, something else has been thrown into the mix that is even more critical for homeowners to understand.

A recent change in Maryland law means that a property tax credit that used to be automatic now requires an application. The General Assembly is considering a proposal to eliminate the requirement, but it is in the early stages of debate and the issue may not be decided until the spring.

The Homestead Tax Credit puts a cap on how much a homeowner's taxes can rise each year. The state sets a minimum cap of 10 percent, but some jurisdictions have even lower caps. Baltimore City and Baltimore County caps are both at 4 percent.

This means that, even if your assessment rises 50 percent, the actual taxes you owe will not rise at the same rate.

In the past, every homeowner's taxes were automatically capped. But lawmakers said recently that landlords were inappropriately receiving the cap on rental properties, as were people who received the caps on their vacation homes.

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"I think a lot of people just have no idea about it," said Daniel Motz, a real estate agent with Coldwell Banker Residential Brokerage in Baltimore City. "They won't apply for the credit and then they will get burned."

Only homeowners who recently received assessment notices must file for the credit now.

Others who are reassessed in 2009 or 2010 can wait until then to file. People who purchased or will purchase houses in the first quarter of this year will also receive applications for the credit.

Paper applications for the credit were included in the recent assessments mailed by the state Department of Assessments & Taxation.

Online applications can also be filed at www.dat.state. md.us. The deadline to file electronically is April 1. The number to call with questions or to obtain help filing the application is 410-767-2165.

Kristine Henry


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