Plan Aims To Reveal Tax Jump On Homes

In Montgomery, Buyers Would Get Details Upfront

Montgomery County Council member Phil Andrews plans to introduce a proposal today that would compel home sellers to disclose to potential buyers how much their annual property taxes would increase -- an often-hidden cost that could add thousands of dollars in annual expenses.

Most sellers create fliers that list current taxes. But they usually fail to mention that once a sale is completed, a county-imposed lid on property tax increases comes off, and the county begins to charge much more in property taxes, Andrews said. The seller usually doesn't reveal the likelihood of an increase until the deal is nearly done. Andrews's measure would require that information much sooner in the process.

As property assessments in the county have soared in recent years, the increase has often become a very expensive cost to home buyers who fail to factor it in while deciding whether they can afford a home.

"I want to help prospective home buyers know what their obligations will be, so they can make an informed decision about what they can afford to buy and what they can afford to pay in taxes," said Andrews (D-Gaithersburg-Rockville), who headed the government watchdog group Common Cause Maryland before running for the council nine years ago.

For some people, that increase could make a huge difference in their ability to afford the home. In one example, Andrews cited county data that show owners who sell a house for about $560,000, a low figure for many parts of Montgomery, would pay about $2,700 in property taxes in fiscal 2009 if they stayed in the property. The new owner would be subject to an increase in property taxes because properties are reassessed after they are sold. That means the new owner would pay more than $4,700, Andrews said.

As he researched his plan, he was unable to find a similar law on the books in other jurisdictions that compels sellers to disclose exactly what the new property taxes would be, Andrews said.

His proposal drew immediate support from several of his colleagues. Council President Marilyn Praisner (D-Eastern County), Vice President Michael Knapp (D-Upcounty) and members Marc Elrich (D-At Large) and Duchy Trachtenberg (D-At Large) have said they would support the measure. With four co-sponsors, Andrews has enough support to win the bill's passage, even if the four other council members do not sign on.

It was not immediately clear how the real estate industry, which handles the bulk of sales in the county, would respond to Andrews's plan.

Meredith R. Weisel, a lobbyist for the Greater Capital Area Association of Realtors, said in an e-mail that she was studying Andrews's bill and hoped to work with him "to find an amicable solution." She noted that sales contracts for home buying disclose that property taxes "could substantially increase following transfer of title."

But Andrews said the timing and the amount of detail are key.

Andrews said rapidly rising assessments the past few years have meant that "almost every new homeowner will pay more in property taxes than the current owner. I want to give people information upfront so they can make a decision," he said.

The county's Office of Consumer Protection would enforce the rule, Andrews said. At least four county municipalities -- Barnesville, Kensington, Poolesville and Rockville -- would be exempt because of local laws. Andrews said he hoped to work with officials in those areas to seek support for his plan, which the municipalities could enact themselves.