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Tuesday, May 18, 2021

County Council votes to shift more of property tax burden to resident homeowners

Watch Montgomery County Council analyst Gene Smith reveal growing property tax leakage in his May 17 testimony.  His testimony is a little cryptic to those who are not familiar with how property taxes are calculated, but the County Council members understand (or should understand) what's going on.

Mr. Smith explained that the number of properties that have not applied for the Homestead Tax Credit but are receiving the Income Tax Offset Credit (ITOC) is even greater than five years ago. None of the County Council members had questions or expressed concerns about the growing gap. 

Our experience indicates that the most likely causes of the gap between the number of Homestead Tax Credit applications and the number of ITOC credits are failure of new resident homeowners to submit their Homestead Credit Applications and failure of new and existing landlords to advise the State Department of Assessments and Taxation (SDAT) that their investment properties are incorrectly coded as "principal residences". Failure of the state and the county to detect improperly coded investment properties shifts even more of the property tax burden to homeowners who are actually using their properties as their principal residence. 

Data provided by SDAT shows that the amount of tax leakage is likely in the tens of millions of dollars each year.

Start watching at the 3:00 mark.

https://www.youtube.com/watch?v=9kZUDhOfdTY

As explained in testimony by a county resident, Baltimore City has completely eliminated the problem that Mr. Smith revealed by issuing the ITOC only to properties that have an approved Homestead Tax Credit application on file at SDAT.  Even though Baltimore City's solution has been highly successful, Montgomery County refuses to adopt Baltimore City's approach. 

https://www.montgomerycountymd.gov/COUNCIL/Resources/Files/agenda/col/2021/20210504/testimony/item7-LouisWilen.pdf

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