Property taxes are a critical aspect of homeownership in Maryland, playing a vital role in funding public services like schools, infrastructure and community resources. Understanding how these taxes are assessed, what exemptions are available and recent changes in the tax landscape can help homeowners manage their financial responsibilities more effectively. This article explores the essential components of property taxes in Maryland, including the relevant laws, exemptions and the services that a tax professional like Watter CPA can provide.
Maryland’s property tax system is regulated by the Maryland Department of Assessments and Taxation (SDAT). The property tax is primarily determined by the assessed value of the property, which is reevaluated every three years in accordance with market trends. This reassessment is crucial because it ensures that property values—and consequently, tax obligations—reflect current market conditions. In 2024, property tax assessments saw significant increases, with an average rise of about 23.4% across the state, driven by a strong real estate market and limited housing supply.
Property taxes in Maryland are governed by several statutes, most notably those outlined in the Tax-Property Article of the Annotated Code of Maryland. The SDAT is responsible for administering these laws, ensuring equitable assessments, and overseeing the appeal process. The appeal process is essential for homeowners who believe their property has been overvalued, allowing them to contest the assessment and potentially reduce their tax burden.
Maryland offers several property tax credits and exemptions designed to ease the financial burden on homeowners, especially those with lower incomes or specific qualifications.
While property taxes are primarily a state and local issue, federal tax law also plays a role. Under the federal tax code, homeowners can deduct state and local property taxes from their federal taxable income, up to a cap of $10,000. This deduction can help offset some of the financial burdens of high property taxes, although changes under the Tax Cuts and Jobs Act of 2017 have limited the overall effectiveness of this deduction for many taxpayers.
As mentioned earlier, Maryland homeowners have experienced significant changes in property tax assessments in 2024. The SDAT has reported substantial increases in property values across the state, driven by a strong real estate market. While these increases reflect rising home values, they also result in higher property taxes, prompting many homeowners to consider appealing their assessments.
The appeal process in Maryland is structured in multiple levels, beginning with a "Supervisor’s Level" appeal, where homeowners can discuss their assessment with a local assessor. If unsatisfied with the outcome, they can escalate the appeal to the Property Tax Assessment Appeal Board and, ultimately to the Maryland Tax Court if necessary.
For homeowners navigating Maryland's property tax landscape, the expertise of a CPA firm like Watter CPA can be invaluable. Watter CPA can assist with:
Property taxes in Maryland are a significant consideration for homeowners, requiring careful attention to assessments, available credits and possible appeals. Understanding the nuances of the state's property tax system and leveraging available resources can make a substantial difference in managing tax obligations.
This comprehensive approach to property tax management not only helps to minimize the financial impact but also ensures compliance with Maryland’s legal framework, making it an essential part of responsible homeownership in the state.
