How to go about getting the Homeowners Property Tax Credit

 

original imagep provided by  NSTP

Prospective Home Buyers


Qualified home purchasers should apply in advance for the Homeowners' Tax Credit before acquiring title to the property. The purpose of this program is to help reduce the amount of monies needed at the time of settlement. You must apply at least 30 days before your expected settlement date to receive any credit due at the time of settlement. For more information, please call the Tax Credit Telephone Service.

 

How Is The Credit Figured?

The tax credit is based upon the amount by which the property taxes exceed a percentage of your income according to the following formula: 0% of the first $8,000 of the combined household income; 4% of the next $4,000 of income; 6.5% of the next $4,000 of income; and 9% of all income above $16,000.

Using the new higher benefit formula enacted by the 2006 session of the General Assembly, the chart below is printed in $1,000 increments to show you the specific tax limit for each income level.

Household Income

Tax Limit

$1 - 8,000

$0

9,000

40

10,000

80

11,000

120

12,000

160

13,000

225

14,000

290

15,000

355

16,000

420

17,000

510

18,000

600

19,000

690

20,000

780

21,000

870

22,000

960

23,000

1050

24,000

1140

25,000

1230

26,000

1320

27,000

1410

28,000

1500

29,000

1590

30,000

1,680

and up to a maximum
of $60,000

*

 


                         

* For each additional $1,000 of income above $30,000, you add $90 to $1,680 to find the tax limit. Your combined gross household income cannot exceed $60,000.

Example:If your combined household income is $16,000, you see from the chart that your tax limit is $420. You would be entitled to receive a credit for any taxes above the $420. If your actual property tax bill was $990, you would receive a tax credit in the amount of $570 --- this being the difference between the actual tax bill and the tax limit.

What Other Limitations?

  • Only the taxes resulting from the first $300,000 of assessed valuation.
  • It does not cover any metropolitan or fixed charges for water and sewer services that may appear on the tax bill.
  • If an applicant owns a large tract of land, the credit will be limited to the lot or curtilage on which the dwelling stands and will not include the excess acreage.
  • If a portion of your dwelling is used for commercial or business purposes, the credit will be based only upon the taxes for that portion of the dwelling occupied by your own household.

Source: Maryland Department of Assessment and Taxation

This post is to provide information only! Realty Navigator and their agents are not licensed CPAs, tax, or financial advisors. You should seek competent tax advice for further information.

 

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