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Homestead Tax Credit Is No Longer Automatic


Maryland Tax BillLet’s start by answering your question, “What is the Maryland Homestead Tax Credit?” 

The Homestead Tax Credit helps homeowners deal with tax assessment increases by limiting the increase in taxable assessments.  In Anne Arundel County, it applies to any increase greater than 2%, according to the July 1 list provided by the Maryland State Department of Assessments and Taxation.

The Homestead Tax Credit is calculated on any property tax assessment increase exceeding 10% (or the lower cap enacted by local governments – 2% in Anne Arundel County) from one year to the next. The credit is calculated based on the 10% limit for purposes of the State property tax, and 10% or less (as determined by local governments – again, 2% in Anne Arundel County) for purposes of local taxation. In other words, the homeowner pays no property tax on the market value increase which is above the limit.  With record-breaking increases in the market value of homes in recent years, many homeowners now enjoy the benefit of this tax credit.

While the MLS listing may provide accurate property tax information in effect at the time of the listing, the amount may include a Homestead Tax Exemption that a new homeowner will not be eligible to receive initially.  Therefore, if you are buying a Crofton home, it would be wise to check with the Tax Assessment office to determine the amount of property tax you will pay, when the Homestead Tax Credit is not applied.  

tax creditThe Homestead Tax Credit applies only when the following conditions  are met during the previous tax year:

The dwelling must be the owner’s principal residence and the owner must have lived in it for at least six months of the year, including July 1 of the year for which the credit is applicable, unless the owner was temporarily unable to do so by reason of illness or need of special care. An owner can receive a credit only on one property – the principal residence.  Residential rental properties are not eligible for the Homestead Credit.


Legislation enacted during the 2007 session of the Maryland General Assembly requires all homeowners to submit a one-time application in order to continue their eligibility for the homestead tax credit.  The Department of Assessments and Taxation will include the application in Assessment Notices mailed to one-third of the property owners on December 28, 2007.  Homeowners whose properties are not in that one-third of the county being reassessed this year can wait until their properties are assessed in the next two years to submit an application.  New purchasers of properties also will be mailed a homestead application by the Department.


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