The house was as vacant as could be - a boarded-up blight on the neighborhood. Why, Matt Gonter wondered, was the owner getting a tax break for supposedly living there?
Hoping to make a difference in his Baltimore community, Gonter alerted the tax assessors. And there it might have ended. Except he thought he'd see if the owners of other all-but-abandoned homes in Patterson Park were wrongfully benefiting from the state's homestead property tax credit, too. Then he checked on vacant homes in nearby neighborhoods. And on city homes listed for rent.
That's how one determined accountant managed to find - by his tally - nearly 1,000 Baltimore houses owned by people who appeared to be getting tax breaks they didn't legally deserve.
"It just became a crusade," Gonter said.
The scale of that crusade is unusual, but he's not the only citizen asking the state Department of Assessments and Taxation to investigate potential scofflaws. Property taxes are a sore subject for many, particularly in the city, which has a tax rate at least double that of Maryland's counties. There's nothing like someone paying less than they should to get folks steamed.
The homestead credit puts a ceiling on property tax increases for people who live in the homes they own. That means it can be worth hundreds or even thousands of dollars a year for a single house. In Baltimore, the cap is 4 percent - far less than the annual increase in home prices earlier in the decade.
All told, 1.4 million Marylanders are getting just over $1 billion in breaks from the program.
Concerned that a sizable number of landlords and others with multiple homes were unfairly benefiting, the Maryland General Assembly passed a law last year requiring all homeowners to apply for the credit. The state, which will notify every homeowner over the next three years about applying for the credit, will use the personal information they provide to verify that they're not double-dipping.
Some 450,000 applications have come in, but for most Marylanders, the deadline isn't until 2012.
Gonter, who says some of the faux owner-occupants near him were paying $3,000 a year less in property taxes than he was, thinks the state will lose a lot of money in the meantime if no one is auditing the records.
"I don't see why they just don't do it themselves," he said. "It's not rocket science, what I'm doing."
The state Department of Assessments and Taxation says it does do homestead-credit checks. It investigates whenever an owner wants the tax bill sent somewhere other than the house getting the break, said Robert E. Young, who's in charge of the homestead program. Workers visiting neighborhoods to reassess homes also knock on doors and take note when it's a tenant who answers.
And the state, which believes the new law will help it check every homeowner, also looks to see whether properties with credits are listed or licensed for rent.
"The law makes sure that over a period of years, we're going to check every one of these properties rather than having someone alerting us to the problem," Young said. Sometimes it's a local government agency that takes the bull by the horns. Howard County's finance department analyzed records this spring and discovered that the owners of about 1,000 Howard rentals were getting homestead credits on those properties, said finance director Sharon Greisz. The county expects to collect $1.5 million from those property owners, including as much as three years of back payments.
And Baltimore officials said last month that they mailed bills to owners of 200 city properties who they believe are improperly receiving property tax breaks, while the state said it will send letters to the owners of about 1,400 other city properties in hopes of saving almost $2 million.
State officials say tips have mounted in recent years after news reports highlighted the tax credit. For example, several state lawmakers had claimed the credit last year on properties that were not their primary residences, a Baltimore Sun investigation found.Gonter believes residents concerned about absentee landlords or angry about tax rates shouldn't hesitate to step in themselves. If all real estate investors and other people who are not owner-occupants paid their fair share, he said, "maybe you can justify a tax decrease across the board."
He has tapped information available to anyone, cross-checking the state's property look-up site - which notes whether a home is registered as a principal residence - against such online resources as a list of vacant properties in the city. He goes to Craigslist to see which houses are advertised for rent. He has found proof that owners are out-of-state landlords by the tenant complaints they've filed with the court system.
He's been at it for a year.
"I just think it's a total drop in the bucket," Gonter said. "There's got to be tens of thousands of these properties being cheated on."
Harold Christopher Lloyd, a homeowner advocate from Baltimore County who counsels people at no charge about appealing their property taxes, understands why Gonter is upset. But it saddens him to see neighbors informing on neighbors. The property tax system, he believes, "pits people against people."
"If I had my way - if I were king for the day in this - I would abolish all tax credits and I would abolish all exemptions because it just allows for maneuverings and unfairness," said Lloyd, a retired state employee. "One person's tax credit is another person's tax burden."
Young, who is associate director of the assessments department, said the state appreciates tips - whomever they might come from. "It's to every homeowner's advantage that people who aren't entitled to this [credit] aren't receiving it," he said.
Assessors check out tips by contacting the property owners to ask for proof they're eligible for the credits. No response - or no documentation - and the credits are removed, said Owen C. Charles, supervisor of assessments in Baltimore. You have to live in a home for more than six months of the year to qualify.
Some of the homes Gonter thought weren't a principal residence actually were. The city listed some properties as vacant even after they were rehabbed and sold, he said. But in most cases, he said, the addresses he forwards to the state end up stripped of homestead credits before long.
Charles figures some owners aren't aware they're getting an undeserved break, especially those who once lived in the homes but no longer do. Others, he said, "may have deliberately taken advantage."
Tipsters have shined a light on such owners for years, he said. The complaints are just more frequent now - partly because the homestead credit received so much attention in the past year and partly because of Gonter.
"He's been persistent," Charles said.
What's the homestead tax credit?
Maryland caps property tax increases for those who live in the homes they own. The maximum increase ranges from 0 percent to 10 percent in the state's jurisdictions.
To qualify for the tax break, an owner must make the home his or her principal residence by living in it for more than six months out of the fiscal year, including the first day of that year - July 1. New buyers aren't eligible until they've been in their home for a full fiscal year.
Homeowners must pay the back taxes if the government determines they were receiving the credit erroneously. Penalties kick in if a homeowner can't pay all the back taxes immediately.
LOOKING IT UP
How do I let the state know if I no longer qualify for a tax credit?
Write to the state Department of Assessments and Taxation at its headquarters, 301 W. Preston St., Baltimore 21201, or to one of its local offices. You can find a list at dat.state.md.us/sdatweb/county.html
How can I research the situation?
It's not an exact science. But Matt Gonter, a Patterson Park resident who has made a hobby out of the practice, suggests several online resources:
* The state's property look-up site at
a http://sdatcert3.resiusa.org/rp_rewrite which notes whether a home is occupied by the owner or not.
* Sites where landlords advertise homes for rent, such as Craigslist (baltimore.craigslist.org).
* Baltimore's searchable database of housing code violations, which notes whether properties are vacant (baltimorehousing.org /index/inspections.asp).
* Maryland's judiciary case search site, http://casesearch.courts.state.md.us. If a property owner is trying to evict tenants from a home you're researching, odds are pretty good that he or she isn't living there.