For assistance on doing the calculations, here is the contact information for the Office of Consumer Protection: Phone: 240.777.3636 Fax: 240.777.3768 General E-mail: ConsumerProtection@montgomerycountymd.gov

Below are more specific details on what the estimated post-purchase property tax must include: 

• the estimated tax must be based on all rates in force when the material is produced
• all State and County property taxes (including special service area tax) and any applicable municipal property taxes
• any other non-tax fee or charge included on the consolidated tax bill
• both the annual property tax that the current owner pays and the annual estimated property tax that the buyer would pay MUST be featured equally prominently on the advertising material produced
• the estimate of taxes MUST be updated each July 1, to reflect changes in tax, fee, and charge rates
• the estimate of taxes MUST be updated by January 31, if the current fiscal year is the third year of the property’s 3-year assessment cycle, to reflect the revised assessed value of the property

A SELLER OR THE SELLER’S AGENT IS NOT LIABLE FOR ANY INCORRECT ESTIMATED TAX INFORMATION DISCLOSED, IF THEY HAVE RELIED IN GOOD FAITH ON A METHOD APPROVED OR RECOMMENDED BY THE COUNTY.

* The county is still working out what format we’ll use to calculate this tax.  Why are they doing this, you ask?  When buyers look to purchase property generally the tax that is listed is the seller’s payment, which takes into account the homestead exemption.  So it can be significantly less than what a new buyer will take on when they buy the property.  The bank generally figures in the new tax rate when they are doing good faith estimates, but there are those lenders who mask this true cost and reveal it only at settlement when the clients are hostage to whatever financing is in place.  Shame on them.

It’s precisely because of this there is new legislation in place to ensure that buyers know the taxes will be higher.  Then they can apply for their own homestead exemption in MD.  I’ve done this all along for my buyers so there’s no change in my process other than more cumbersome paperwork or in my case more spreadsheets! 

At its final voting session on the growth policy for 2007-2009, the County Council voted to increase impact taxes, impose new school and transportation adequacy tests, and increase the recordation tax. New revenue from the recordation tax increase will go towards rental assistance programs and County Government capital projects like roads, police, and fire stations. A motion was made to hold off on the recordation tax legislation until the Council begins budget deliberations in May, but ultimately failed. In the final version of the recordation tax increase that was approved:

• Sale price at $500,000 and below – NO increase on the recordation tax
• Sale Price above $500,000 – Rate increase of $3.10/$1,000 only on the additional consideration above $500,000; [i.e. a $600,000 sales price would be charged $6.90/$1000 on $550,000 (because of $50,000 exemption), then additional $3.10/$1000 on $100,000 which is the additional increment above $500,000, so essentially an additional $310 on a $600,000 home]
• Effective Date: March 1, 2008 and applies to any settlement that occurs on or after that date. Any settlement that occurs prior to March 1, 2008 will be subject to the old rates notwithstanding the date the deed is recorded. Contracts written prior to March 1, 2008 but go to settlement on or after March 1, 2008 are subject to the new rates.

If you have any questions about how this will affect your real estate purchase, please give me a call.  This tax is much better than it was originally written because we gave them a great deal of “input” about their original plans.

For more information about real estate sales in Bethesda, MD 20816 please email me at josette.skilling@longandfoster.com

The State of Maryland recently enacted legislation, effective January 1, 2008, requiring an owner of a principal residence to submit a homestead application in order to receive any homestead credits. Because this is a new law and the State of Maryland only released the specifics of its implementation just prior to the January 1, 2008 effective date, a lot of confusion exists concerning its affect on the homeowner. I have flushed out some additional details that you may find helpful:

a. New Homeowners: New homeowners may apply for the homestead exemption at the time of their settlement but will not be eligible for the homestead exemption until they have resided in the property for one calendar year. Furthermore, the homeowner will not actually see the credits appear on their tax bill until the following fiscal year (i.e., July 1 through June 30). For example, if one were to purchase their principal residence in January 2008, they will not qualify for the exemption until January 2009 and will not receive the credits until the July 2009 tax bill. They will not receive a "recapture" credit for the period between the first anniversary of settlement and the beginning of the fiscal year in which the credits first appear. Unlike DC homestead applications where we submit the applications with the recording package the title company, would submit the Maryland applications to SDAT in Baltimore rather than with the recording package to the local jurisdiction.

b. Existing Homeowners: Existing homeowners will have until December 31, 2012 to apply-otherwise, they will lose their homestead credits. Existing homeowners whose properties are subject to reassessment should have received information with their tax assessment notice (not tax bill) that explains how to apply online. That information also includes the homeowner’s Real Property Account Number and an "Access Number". Existing homeowners who received an assessment notice will have until April 1, 2008 to file the homestead application electronically. If the home is not subject to reassessment for this year, the homeowner cannot apply electronically, but may still apply using the written application. In that instance, the State of Maryland will accept the "early" application but will not process it until reassessment of the subject property. Irrespective of when they apply for their homestead credits, once a homeowner has submitted the application, however, they will not have to reapply upon reassessment of their property.

c. For additional information, you may check the State Department of Assessments and Taxation website at: https://sdathtc.resiusa.org/homestead/

For existing homeowners, you will have until December 31, 2012 to apply for this credit, even if you received your assessment notice this year. The April 1, 2008 date represents an artificial deadline to apply electronically only.

If you currently receive a homestead credit on your bill and apply after April 1, 2008, you must do so by mail using the written application. Furthermore, for those who just received an assessment notice and are already receiving the homestead credits, if you fail to apply before the issuance of the July 1, 2008 tax bill, you will continue to receive those credits, but you will also receive notices reminding you of your failure to apply. The State of Maryland is consciously not advertising the December 31, 2012 deadline in an effort to encourage homeowners to apply early.

The bottom line is that if you receive your assessment notice and have internet access, there is no reason not to apply electronically by April 1, 2008, since it takes less than 60 seconds to do! Nonetheless, failure to do so will not result in loss of the homestead credits until the statutory deadline of December 31, 2012.

Clear as mud? If you need help understanding what Maryland thinks is crystal clear, call me and I’ll help you understand how to ensure your homestead credit continues.

Edit:  Once you do this, you are done!  Well at least until Maryland changes its laws again

For more information about real estate sales in Bethesda, MD 20816 please email me at josette.skilling@longandfoster.com or visit my website at http://www.josetteskilling.com/