The Baltimore Sun reported that the more than 700,000 Maryland property owners who will receive property tax bills this month should know about a little-known change in the state’s tax laws that makes signing up necessary to getting a break on those taxes.

The new law, which took effect on October 1, was designed to keep ineligible property owners from illegally taking advantage of tax caps by requiring homeowners to apply for tax credits they’ve been receiving automatically.

Though the state’s Homestead Tax Act allows homeowners to receive the tax break only for a primary residence, owners of multiple residences have apparently been benefiting as well.

Applications for the tax credit will be included in the reassessment notices scheduled to be sent on December 28.

Current homeowners have several years to get their tax-break benefits: Only those who fail to apply for their tax credits by the end of 2012 will have to pay taxes on the full value of their homes. However, those who purchase a home after December 31 only have 180 days from the date of purchase to apply for the tax credit.

Not applying for the tax credit could be costly: The average annual savings enjoyed by property owners in Howard County, for example, is slightly more than $1,100. Legislative analysts say that Maryland homeowners would have paid a total of $669 million more in property taxes this year without benefit of the caps.

Many property owners already know that their tax bills aren’t figured on the full value of their homes courtesy of assessment caps provided by the state and many local jurisdictions. Only one break per homeowner is allowed, but increasing number of people with multiple residences who claim the credit for both homes, and those with a second home out of state. Given the huge jump in real estate values over the past years, the assessment caps protect longtime homeowners from sudden, large property tax increases.

Critics of the legislation claim say it could put homeowners at risk for higher taxes because many will also assume that the breaks they’ve received in the past have been figured into the property tax bills they receive this year.

Tags: maryland property taxes, maryland real estate taxes, maryland tax assessments, property tax laws

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