Property tax assessments and the appeals process can be a bit complicated. If you own property in Montgomery County, Maryland and have questions about your property tax assessment and whether it makes sense to file an appeal, please contact me. I have experience helping property owners appeal their property tax assessments and am potentially available to provide assistance.
You receive a single property tax bill each year, issued by your county government. In Maryland, county governments collect the property taxes also due to the state government and your city government (if you live in an incorporated municipality), on their behalf. If you look closely on your annual property tax bill, you can identify how much taxes you are paying to each level of government.
Most Maryland counties make property tax bill information available on the internet. Here are links for the counties in central Maryland and Baltimore City:
|County||Property Tax Bills|
The Maryland state government agency responsible for assessments is the State Department of Assessments and Taxation (SDAT). SDAT’s headquarters is in Baltimore City. However, SDAT has a local office in each of Maryland’s counties. Each local SDAT office employs assessors, who are state government employees who determine the assessment values for properties in that county.
Locations and contact information for all local SDAT offices can be found at:
Each property in Maryland receives a new assessment value from the state government every three years, as of January 1. To accomplish this, the state government has divided properties in Baltimore City and in each county into three groups. Each year, on a rolling basis, the properties in one of the three groups are reassessed. For properties being reassessed, new assessment notices are sent within the first several weeks of January.
Key items provided there for any specific property include:
Assessment year: The property was last assessed as of January 1 of the year indicated. The property’s next assessment will be on January 1 of the year three years later.
|Assessment year||Date of assessment||Year 1 of current cycle||Year 2 of current cycle||Year 3 of current cycle||Next assessment|
Base value: The property’s prior assessment value. The value is comprised of the value of the land and the value of all improvements. This value is relevant in calculating the phase-in of any increase from the prior assessment value to the current assessment value. See FAQ #5 below for more information about the phase in of assessment increases.
Value as of…: The property’s current assessment value, as of the date of assessment. The value is comprised of the value of the land and the value of all improvements.
Principal residence: This should be “yes” if the property is in fact the owner’s primary residence and, as a result, would make it eligible for the Homestead Tax Credit program. If the property is a second home or a rental property, this should be “no.” Claiming that a property is a principal residence when it is not is a violation of the law. If your property is a principal residence but is not indicated as such, you can contact your local SDAT office to request a change in status.
Homestead Application Status: This indicates if the property has qualified to receive Homestead Tax Credits. See FAQ #6 below for more information about the Homestead Tax Credit Program.
Year 1: $525,000
Year 2: $550,000
Year 3: $575,000
If a property’s assessment decreases from one three-year cycle to the next, the decrease takes place immediately (all in the first year). There is no phase in of assessment decreases.
The maximum percentage the taxable portion of your assessment can increase each year for state tax purposes is 10%. The maximum percentage increase for county and municipal tax purposes vary and are provided at: dat.maryland.gov/realproperty/Documents/Homestead_Percent_Caps.pdf. Note that “110” means 10%, “105” means 5%, etc. For any municipality not listed, the municipality’s county rate applies.
How Homestead Tax Credits are indicated on a property tax bill varies by county.
It is necessary to apply for Homestead Tax Credits if you are not already receiving them and you believe you may qualify. More information about the Homestead Tax Credit program is provided at: dat.maryland.gov/realproperty/Pages/Maryland-Homestead-Tax-Credit.aspx.
Appeal on Reassessment
Every three years, as of January 1, each property in Maryland is reassessed. Notices are sent to each property’s owner indicating the new assessment value for their property. An appeal of this new assessment value must be filed within 45 days of the official “notice date” indicated on the assessment notice.
A successful appeal will lower a property’s assessment value for each of the three years in its three-year assessment cycle which had just begun.
Petition for Review (also known as an “off-cycle appeal”)
The deadline for filing an off-cycle appeal is December 31st of the first or second year of a property’s three-year assessment cycle. The reason for filing an appeal is if the property’s market value is arguably less than the value it was assessed for at the beginning of its three-year assessment cycle.
A successful appeal will lower a property’s assessment value for each of the one or two years remaining in its three-year assessment cycle.
Appeal upon Purchase
Purchasers of property purchased prior to July 1 each year are able to appeal their property’s assessment. The deadline for filing an appeal upon purchase 60 days after the “transfer date” which is the date the purchaser’s deed is recorded by the county recordation office.
Typically, transfer dates range from one day to several weeks after the settlement date and vary depending on when the deed is taken to the recordation office to be recorded (usually by the purchaser’s title company). To be certain of meeting the deadline, purchasers should file their appeal within 60 days of the settlement date.
A successful appeal will lower a property’s assessment value for the current year, plus any additional years remaining in its three-year assessment cycle.
When filing an appeal, you should indicate:
- Your property’s address and property tax identification number
- Your name, mailing address and phone number
- Type of appeal (i.e., Appeal on Reassessment, Petition for Review or Appeal upon Purchase)
- Tax year
- For an Appeal on Reassessment: Assuming you are filing after January 1st, the tax year for the appeal will be the current calendar year.
- For a Petition for Review: Assuming you are filing before the end of the year, the tax year for the appeal will be the next calendar year.
- For an Appeal upon Purchase: The tax year will be the current calendar year.
The levels in the appeal process are:
1 – Supervisor level
This first level of the appeal process is intended by the state government to be an informal exchange of information between the property owner (or their representative) and a state government assessor.
For this appeal, you can request a hearing, either in-person or over the telephone. A hearing is not required. Hearings will be scheduled in advance by the state government. For the supervisor level appeal, they are very informal and tend to be conversational. They typically take 10 to 15 minutes.
At the hearing, the property owner should present evidence to support a proposed lower assessment. If a hearing is not requested, the assessment supervisor will render a decision based on written evidence submitted with the appeal filing.
After considering the evidence, the local assessment supervisor will send a “final notice” indicating their decision regarding a requested assessment reduction. The supervisor’s decision can be appealed to the next level within 30 days of the date of the supervisor’s final notice.
2 – Property Tax Assessment Appeals Board level
In each county in Maryland and Baltimore City, there is a Property Tax Assessment Appeals Board (PTAAB) comprised of three people appointed by the governor and mandated to render their decisions impartially and independently from SDAT.
The PTAAB considers evidence presented by the property owner (or their representative) to support a proposed lower assessment as well as evidence from the state government to support the decision rendered by the assessment supervisor from the supervisor level appeal. The burden of proof is on the property owner to show that their proposed lower assessment is appropriate and based on the fair market value of their property.
Although a hearing is optional, an in-person hearing is highly recommended. Boards typically tend not to take an appeal seriously when the appellant does not request an in-person hearing. An in-person hearing also provides the opportunity to rebut the state government’s argument and comparables.
After considering the evidence, the PTAAB will send a written notice to the property owner. The PTAAB’s decision can be appealed to the next level within 30 days of the PTAAB’s decision.
3 – Maryland Tax Court
After receiving the PTAAB’s decision, you have the option of taking the appeal to higher levels – the Maryland Tax Court and then the regular judiciary system. If you do wish to appeal to the Maryland Tax Court, you must file your appeal within 30 days of the Appeals Board’s decision. Information about the Maryland Tax Court can be found at: taxcourt.maryland.gov
It is essential to use “comparables” which sold before the start of the tax year for which you are appealing your assessment. For example, if you were appealing the new assessment you received in January 2016 for 2016 – 2018, you would need to use houses which sold before January 1, 2016. Any sales after that date would be deemed irrelevant.
The state government defines “arms-length transaction” as “between unrelated parties,” where none of the parties were “acting under duress to buy or sell,” having “had full exposure to the marketplace,” and occurred at a “market price.” Transactions NOT considered arms-length include: transfers between related people, foreclosures, short sales or tax sales. Estate sales typically are also not considered arms-length based on the presumption the sale was made under duress.
In the event your property tax bill does go down and your mortgage company is paying your property tax bills, your mortgage company should, at some point, reduce the amount of your monthly mortgage payment or refund a portion of what they hold in escrow. You should contact your mortgage company to see how they will handle the reduction in your property tax bill.