City and state officials say they regularly double-check to make sure people receiving a property tax credit for homeowners are eligible for the benefit. But, those checks might not have flagged the property of Baltimore Mayor Bernard C. “Jack” Young, who promised to repay $1,095 this week for receiving the tax credit for a home he no longer lived in.
Baltimore Finance Director Henry Raymond said “errors and inappropriately applied” homestead credits are often corrected because staff in the city’s Fiscal Integrity Office and the Housing Department “routinely run checks” to verify that those receiving the credit are eligible for it.
“These checks are often the result of tips provided by other property owners, but can also result from larger data analysis projects conducted by the city,” Raymond said in an email.
For example, Raymond said the Fiscal Integrity Office periodically runs a listing of rental properties from a centralized real estate listing database, comparing properties on the list to those receiving the homestead credit. Any properties found on both lists are forwarded to the Housing Department for further investigation and could have their homestead credit stripped by the state tax department, Raymond said.
Jason Davidson, a spokesman for the Maryland Department of Assessments and Taxation, said the department has a dedicated audit team that reviews homestead accounts for compliance and inconsistencies.
Maryland revoked credits for 8,035 homes this year, including 1,018 homes in Baltimore.
“Circumstances vary for the reason an account [credit] is revoked," Davidson said.
The homestead tax credit dates to the 1970s, when state lawmakers created the program to help homeowners deal with rapidly rising property taxes. The credit limits the increase in taxable assessments each year to a fixed percentage, currently 4% in Baltimore.
Almost 375,000 Maryland homes received the homestead credit this year, including about 39,000 homeowners in Baltimore, according to Davidson.
Young became the latest official accused of misusing the program when it was revealed he collected a homestead tax credit on an East Baltimore rowhouse he doesn’t live in. For years Young collected property tax credits from his longtime Madison Street home worth $70,000. He also owns a $62,600 condo on Central Avenue that is five blocks away.
However, Young recently moved full time into the Central Avenue condo and gave the Madison Street home to his daughter and her husband. Young didn’t update his real estate records to collect the homestead tax credit at his condo, said Lester Davis, a spokesman for Young.
Instead, Young continued to collect benefits at the Madison Street house. Davis said Young could have collected the credit at his new address, but the mayor forgot to update his paperwork because the switch happened after he was elevated to the city’s top job in April.
Young isn’t collecting rent from his daughter, Davis said, but he is registering the house as a rental property. Young told reporters he is also paying back the tax credit he collected on his rowhouse.
As of Thursday, Young had updated state records to reflect that the Madison Street address was no longer his principal residence. He also submitted a revised financial disclosure form to the city ethics board.
Homeowners must meet several requirements to obtain homestead credit for their property. For instance, the homeowner must have lived in the residence for at least six months of the year, unless the owner was temporarily unable to do so “by reason of illness or need of special care,” according to Davidson, the state tax department’s spokesman.
Homestead credits are applied directly to the property owner’s tax bill. To check the status of an application, homeowners can visit the assessments agency’s website, and type in their address on the Real Property Data Search page.
A 2011 Baltimore Sun investigation into improperly collected homestead tax credits spurred several elected officials to pay back wrongly received tax breaks.
For instance, former Baltimore Circuit Court Clerk Frank M. Conaway Sr. paid back more than $3,600 in credits for taxes on a rental home he owns after it emerged he had wrongly been receiving a homestead tax break on the house for years. Stephanie Rawlings-Blake and her then-husband, Kent, collected $4,437 in homestead credits before she became Baltimore’s mayor. Those collections violated a state law prohibiting married couples from claiming the break on more than one residence.
In 2007, lawmakers enacted a law requiring homeowners to submit a one-time application for credit eligibility. That law was designed to prevent homeowners from improperly receiving credit on multiple properties used as vacation homes or rentals. However, Maryland revoked credits on more than 550 Baltimore homes in 2012 after a Sun investigation turned up many examples of owners “double-dipping” on two, three or even four homes. The program cost Baltimore $120 million in foregone revenue that year.