Recipients must apply for the Homeowner’s tax credit each year to reduce their property tax liability.
Note: There is a Renter’s tax credit
To apply for a property tax credit, you need to complete form HTC-60. Send a copy of your tax return, your SSA-1099 form, your retirement income, business income, or your W-2s. Make sure that the “source of income” section of the form agrees with your tax return. Any questions that don’t apply to you or left blank on your tax return should be marked with a zero.
The property tax credit differs from the Homestead credit because the Homestead credit limits the tax liability to 10% of the homeowner’s household income. The City automatically applies this credit if the homeowners’ tax liability exceeds 10% of their household income. The property tax credit is an additional tax credit that the homeowner has to apply for each year.
The State of Maryland has developed a program that allows credits against the homeowner’s property tax bill if the property taxes exceed a fixed percentage of the person’s gross income. In other words, it sets a limit on the amount of property taxes any homeowner must pay based upon his or her income.
How Is “Income” Defined?
For purposes of the tax credit program, it is emphasized that applicants must report total income, which means the combined gross pay before any deductions. Income information must be reported for the homeowner, the spouse, and all other occupants of the household unless they are dependents or are paying rent. Income from all sources must be reported whether or not the monies received are included as income from Federal and State income tax purposes. Nontaxable retirement benefits such as Social Security and Railroad Retirement must be reported as income for the tax credit program. Generally, eligibility for the tax credit will be based upon all monies received in the applicant’s household in a given year.
What Are The Other Requirements?
Besides income, eligibility requires you to meet four basic requirements
- You must own or have a legal interest in the property.
- The dwelling on which you are seeking the tax credit must be your principal residence where you live at least six months of the year, including July 1, unless you are a recent home purchaser or unless you are unable to do so because of your health or need of special care.
- Your net worth, must be less than $200,000. It does not include the value of the property on which you are seeking the credit or any qualified retirement savings or Individual Retirement.
- Your combined gross household income cannot exceed $60,000.
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.
| 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 were $990, you would receive a tax credit for $570— this being the difference between the actual tax bill and the tax limit.
What Other Limitations?
- Only the taxes are 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 house occupied by your household.
How Does One Receive The Credit?
Homeowners who file and qualify by May 1 will receive the credit directly on their tax bill or as a credit certificate issued at the same time the property tax bill is mailed. Persons who file later up until the September 1 deadline will receive any credit due either in the form of a revised tax bill or a tax credit certificate to be used in payment of the invoice. Applicants filing after May 1 are advised not to delay payment of the property tax bill until receipt of the credit if they wish to receive the discount for the early payment offered in some subdivisions. The local government would issue a refund check if the tax bill were paid before the tax credit was granted.
What Happens If One Is Not Eligible?
Whenever homeowners are found not qualified to receive a tax credit, they are informed in writing. The letter gives the reason for denial and what steps to take if further questions remain. The letter also explains how homeowners can appeal the determination of ineligibility to the Local Property Tax Assessments Appeals Board.
