A few days ago, I wrote about property taxes and assessments in Maryland and what they mean when the house being assessed has been the principal residence for several years. The Homestead Tax Credit insulates those owners from the huge increases in assessed value that we’re seeing now.
But what happens if you bought your home after June 30? For you, the Homestead Tax Credit won’t kick in until your second year of homeownership.
Let’s break down the tax assessment. A) is the old total market value when it was assessed three years ago. B) is the new market value. In this example, the value increased over 150%. C) is the amount your taxes will be based on if you just purchased the home or if the property is not your primary residence. The three figures that make up D) are the amounts that the previous owner was paying taxes on due to the Homestead Tax Credit. The amounts vary depending the county, state or municipality.
I’m sure this is clear as mud. The good news is this: If you just bought your house, even though your taxes are likely to go up, after this year you’ll have the benefit of the Homestead Tax Credit. They won’t go up nearly as much after this year. The good news for investors? Your tax deductions just got bigger.
(c) 2006 Susan Pruden