If you’re a homeowner, you probably received your new tax assessment sometime last month and, if you’re like me, you freaked out a little at the new assessed value of your home. Mine increased 150% from the assessment 3 years ago.
After my heart stopped racing, I sat down to figure out what this means in terms of my monthly tax payment on my mortgage. What a pleasant surprise! Because this is my principal residence, I automatically qualify for the Homestead Tax Credit.
Here’s a fairly simple explanation: We pay property taxes to the state and to the county, and for some of us, to a municipality. Currently, the state caps the increase in your tax bill to 10% in any one year. The good news is that Prince George’s County caps the increase at 3% and taxes to the county are the lion’s share of your annual tax bill. (For simplicity, we’ll ignore the municipalities.)
So, I’ve been living in my house since 1991, when taxes (and house prices) were relatively low. With the Homestead Tax Credit, my payments are way below the amount that the current assessment would indicate. I may never pay a tax bill on the full assessed value of my home.
And that’s just fine with me.
If you are a landlord or you bought your home after July 1, you aren’t so lucky. In future entries, I’ll talk about what the new tax assessments mean to you if you just bought a home or if you own rental properties.
(c) 2006 Susan Pruden