senior subcabinet:montgomery county property tax credit programs for seniors

8/19/2019 Senior Subcabinet: Montgomery County Property Tax Credit Programs for Seniors

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Senior Subcabinet:

Montgomery County PropertTax Credit Programs for Senio

Prepared by: Department of Finance

www.montgomerycountymd.gov/financeMarch 2, 2016

http://www.montgomerycountymd.gov/financehttp://www.montgomerycountymd.gov/finance


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State Homeowners Property Tax Credit (H• Provides credits against the homeowner's property tax bill if the

property taxes exceed a fixed % of the applicants’ gross income.

REQUIREMENTS

•

Combined gross household income cannot exceed $60,000 for thehomeowner and spouse and all other non dependent occupants

• Social Security and Railroad Retirement Act Benefits must be reportedas income for the tax credit program.

• Principal residence where you live at least 6 months of the year

• Net worth less than $200,000, not including the house or any qualifiedretirement savings or Individual Retirement Accounts.

CALCULATION

• Tax credit= amount by which the property taxes exceed a percentageof your income:

• 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.

• In FY16 the State HOTC program issued $4,777,163 to 3,723 recipients

• In FY15 the State HOTC program issued $4,877,201 to 3,823 recipients

• 6,232 County residents applied and approximately 60% or 3,723 wereapproved for the credit

• Average: credit was $1,283; income of $24,116; assessment of$270,536

MARYLAND STATE HOMEOWNERS TAX CREDIT

MONTGOMERY COUNTY RESIDENT

FISCAL YEAR 2016

TOTAL

NUMBER

OFTAX CREDIT

INCOME RECIPIENTS AMOUNT

Less than $5,000 22 $46,8

$5,000 - $10,000 256 $568,8

$10,000 - $15,000 485 $953,7

$15,000 - $20,000 611 $1,057,3$20,000 - $25,000 659 $905,8

$25,000 - $30,000 584 $632,4

More than $30,000 1,106 $612,1

TOTAL 3,723 $4,777,1

Source: Maryland State Department of Assessments and T


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Supplemental Homeowners Property Tax C

• The program provides tax credits for homeowners who qualify on the basisof their household income as compared to their property tax bill.

• The State Homeowner’s Property Tax Credit (HOTC) program and its

Montgomery County supplement are administered by SDAT• Granted to eligible homeowners of all ages. Even though the State HOTC is

applied against all real property taxes (State, County, and Municipal), theCounty supplemental credit is applied only against the General County andSpecial Service Area real property tax.

• Taxpayers must apply for the State HOTC to be considered for thesupplemental tax credit.

• Generally, applications must be made by September 1st to be applicable forthat tax year, although taxpayers who are at least 70 years of age may submitretroactive applications for the current and 3 prior levy years at any time.

•

Effective levy year 2005, Montgomery County enhanced the program by (1)doubling the maximum property assessment amount used for computing thetax to $300,000, and (2) changing the income formula to allow for eligibilityat a higher income level.

• Due to changes in the State HOTC credit program in levy year 2006, qualifiedretirement savings are now excluded from the maximum $200,000 net worthrequirement (this net worth requirement already excluded the value of theprincipal property).

Montgomery County Suppleme

Number of Recipients

Fiscal Year Total Supple

FY16 4,810 $4,757,44

FY15 4,899 $4,040,48

FY14 4,957 $4,153,01

FY13 5,178 $4,259,72

FY12 5,199 $4,148,94

FY11 5,115 $3,887,30

FY10 2,980 $2,279,42

FY09 4,805 $3,631,81

FY08 4,822 $3,362,39

FY07 4,704 $3,223,95

FY06 5,121 $4,541,55

FY05 2,884 $557,228


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Senior Property Tax Credit• At least 65

• Principal Residence

• 50 percent of the combined State

Homeowners’ Tax Credit and CountySupplement. Shown as one combined amounton the taxpayer’s property tax bill.

• Senior credit may be based on (1) the Statecredit (if the County Supplement is zero), (2)the County Supplement (if the State credit iszero), or (3) both the State credit and CountySupplement.

• Although this credit does not require a

separate application, taxpayers must apply forthe State HOTC to be considered for thesenior tax credit.

• Since the HOTC application requestsinformation on the age of the applicant, SDATcan make the determination of eligibility forthe Senior credit.

Note: Since SDAT does not provide the certified amount of Senior CreSupplemental Homeowner’s Tax Credit (see previous page), the amo25% of the combined Supplement + Senior Credit for the e stimated n

Levy Year Amt ($)

2014 $ 523,007

2013 $ 540,517

2012 $ 548,733

2011 $ 534,462

2010 $ 500,757

2009 $ 293,633

2008 $ 467,845

2007 $ 433,133


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Income Tax Offset Credit (ITOC)

• The County may grant, by law, a credit against the countyreal property tax in order to offset, in whole or in part,increases in the county income tax revenues resulting

from a county income tax rate in excess of 2.6%.

• Available only to the owner of an owner occupiedresidential property (i.e., principal residence), asdetermined by SDAT.

• The County establishes the amount of a property taxcredit under this section by Resolution for the next levyyear.

• This credit – described as County Property Tax Credit on

the property tax bill - is applied against the GeneralCounty and Special Service Area real property taxes.

• The HOTC, Supplement, Sr, Property Tax Credit, and theITOC will not reduce the Water Quality Protection Charge,Solid Waste fees, Municipal Fees or Taxes, or a WSSCFront Foot Benefit Assessment.

Levy Year Credit Amount A

2014 $ 692 $ 168,78

2013 $ 692 $ 168,67

2012 $ 692 $ 168,37

2011 $ 692 $ 169,02

2010 $ 692 $ 168,68

2009 $ 692 $ 168,16

2008 $ 690 $ 142,29

2007 $ 579 $ 150,29


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Homestead Credit• To assist homeowners with the fiscal impact from large assessment

increases, the Homestead Property Tax Credit program limits theannual taxable assessment increase to a rate set annually by countyresolution between 0% and 10%.

• The Homestead credit is applied against the General County andSpecial Service Area real property taxes.

• This program is administered by SDAT and applies only to owner-occupied residential dwellings who have applied for the credit.

• This credit is not applicable in the first year following the purchase of anew home.

• The State of Maryland, Montgomery County, and municipalities inMontgomery County use a 10% homestead credit which results in anyannual assessment growth in excess of 10% to become a credit.

• For example, if the annual phase-in of assessment growth is 25%, the

homestead credit will reflect 15% while the remaining 10% is reflectedin taxable assessment growth that year.

• In addition to limiting annual growth in taxable assessments forhomeowners, the homestead credit spreads out the assessmentgrowth over a longer period of time resulting in a more stable revenueflow.

• Since the cumulative credit can be significant, some taxpayers may stillobserve growth in their taxable assessment during times of weak realestate market conditions as prior year growth is still being phased in.

• Town of Kensington which elected to set the rate at 5% effective LY

2006

Levy Year Credit Amount

2014 $ 962,007

2013 $ 894,907

2012 $ 2,463,384

2011 $ 6,904,893

2010 $ 46,094,294

2009 $ 134,723,816

2008 $ 213,955,975


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State Renter’s Property Tax Relief• At least 60 years old or

• Permanently and totally disabled and has qualified for federal benefits or has been certified by the County Health Officer as tot

• A surviving spouse of one who would otherwise have been eligible; or

• Under 60 years and:• Has gross income below the poverty threshold that is established by the U.S. Department of Commerce, Bureau of the Census in August of the

• Has one or more dependent children under 18 years old living with the renter; and• Does not receive federal or State housing subsidies or reside in public housing.

• Gross income is under the limit set each year ($16,317 in income for a 2 person household in 2015). amount varies by household s

• all applicants must:

• Have net worth of $200,000 or below

• Apply on or before September 1

• The property tax relief is the assumed property tax on real property less a percentage of the combined income of the renter.

• Assumed real property tax is 15% of the occupancy rent paid by a renter during the calendar year

• 0% of the 1st $4,000 of combined income;

• 2.5% of the 2nd $4,000 of combined income;

• 5.5% of the 3rd $4,000 of combined income;

• 7.5% of the 4th $4,000 of combined income; and

• 9% of the combined income over $16,000.

• The property tax relief under this section may not be:

• (1) more than $750;

• (2) granted to any renter whose combined net worth exceeds $200,000 as of December 31 of the calendar year for which the

• (3) granted to any renter whose dwelling is exempt from property tax


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Renter’s Property Tax Relief: County Supple

• County Supplement will be effective for Levy Year 2016 (7/1

• 50% of the State Renter’s Property Tax Credit

• No additional application required


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Property Tax Deferral

• A taxpayer may defer payment of County property taxes due on residential real pro• used as the owner’s principal residence.

•

The amount of taxes that may be deferred for any one year is:• the amount that County taxes exceed the amount of County taxes in the prior taxable year.

• Taxes that are eligible for deferral are the General County and Special Service Area rtaxes, if:

• The gross income or combined gross income of all individuals who actually reside in the dwelexceed $120,000 for the preceding calendar year; and

• The owner, or at least one of the owners, must reside in the dwelling as their principal place omust have done so for at least 5 years.

• Interest accrues on the deferred taxes at a rate set annually by the County that doe

the prime lending rate (~3%).• The annual interest rate set by the County applies to any tax deferred that year, rega

year when the tax was first deferred (i.e., the new interest rate is applied to all defe

• The accumulation of deferred taxes and accrued interest must not exceed 50% of thvalue of the property.


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www.montgomerycountymd.gov/finance


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http://dat.maryland.gov/Pages/Tax-Credit-Programs.aspx


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Resources• Tax Expenditure Report:

http://www.montgomerycountymd.gov/Finance/Resources/

%20Expenditure%20Report%20FY15.pdf • State Department of Assessments and Taxation

http://dat.maryland.gov/Pages/default.aspx

• Homeowners Prop Tax Credit:http://dat.maryland.gov/realproperty/Pages/Homeowners%

Property-Tax-Credit-Program.aspx• View or Pay your property Tax Credit On line

https://www2.montgomerycountymd.gov/realpropertytax/dex
http://www.montgomerycountymd.gov/Finance/Resources/Files/Tax%20Expenditure%20Report%20FY15.pdfhttp://www.montgomerycountymd.gov/Finance/Resources/Files/Tax%20Expenditure%20Report%20FY15.pdfhttp://dat.maryland.gov/Pages/default.aspxhttp://dat.maryland.gov/realproperty/Pages/Homeowners'-Property-Tax-Credit-Program.aspxhttp://dat.maryland.gov/realproperty/Pages/Homeowners'-Property-Tax-Credit-Program.aspxhttp://dat.maryland.gov/realproperty/Pages/Homeowners'-Property-Tax-Credit-Program.aspxhttps://www2.montgomerycountymd.gov/realpropertytax/default.aspxhttps://www2.montgomerycountymd.gov/realpropertytax/default.aspxhttps://www2.montgomerycountymd.gov/realpropertytax/default.aspxhttp://dat.maryland.gov/realproperty/Pages/Homeowners'-Property-Tax-Credit-Program.aspxhttp://dat.maryland.gov/Pages/default.aspxhttp://www.montgomerycountymd.gov/Finance/Resources/Files/Tax%20Expenditure%20Report%20FY15.pdf

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