Home Price Drops Don't Slow Md. Assessments
Values Still Increase 33% in Three Years

By Ann E. Marimow
Washington Post Staff Writer
Wednesday, January 2, 2008

Homeowners in Maryland should brace for higher property assessments arriving in the mail this week even as the real estate market has softened, with prices falling in some parts of the state.

Property values for homes and businesses have increased statewide by an average of 33 percent over three years, according to the State Department of Assessments and Taxation, compared with an average increase of 47 percent three years ago.

In Maryland's Washington suburbs, assessments increased 51.6 percent over three years in Prince George's County, second only to a 75 percent surge in Baltimore. Montgomery County assessments rose 16.2 percent, the smallest increase of any jurisdiction in the state. Charles County assessments climbed 41.4 percent, Anne Arundel County 34.9 percent and Howard County 24.2 percent.

Tax rates set in the spring by local government officials will be applied to the assessments, providing a base of funding for day-to-day county spending.

Despite the double-digit increases statewide, many Maryland homeowners will qualify for a tax credit that limits property tax increases on primary residences to 10 percent or less each year. The value of a home in Chevy Chase assessed at $597,000 three years ago, for instance, has increased to $617,000. But because of the cap, the taxable assessment is $460,000.

Owners must submit a one-time application this year for the Homestead Property Tax Credit by mail or online. In the past, eligible property owners were automatically enrolled.

Tax officials said yesterday that they are concerned that property owners might disregard the application notice included in the mailing, which could result in an increase in tax bills.

"A lot of people are not going to understand it or are going to ignore it," said Michael Chait, assistant supervisor of assessments for Montgomery County. "We are really concerned about older people missing this."

Maryland properties are reassessed every three years, with appraisals conducted in roughly one-third of a jurisdiction's communities each year. Howard and St. Mary's counties further limit increases in taxable assessments to 5 percent each year, Prince George's to 4 percent and Anne Arundel to 2 percent.

Prince George's County Executive Jack B. Johnson (D) yesterday hailed the surge in real estate values in his county as a sign that Prince George's is "a good investment."

"People realize this is the place to live and work," he said in a news release.

The assessments for the 2008 tax year in the county were conducted in Bowie, Upper Marlboro and Laurel.

In Montgomery, where assessments were conducted in Chevy Chase, Potomac and parts of Silver Spring, officials said the modest increase reflects a softening real estate market. In Baltimore, local tax officials said assessments are rising at a more rapid clip because homes are still relatively affordable.

"We peaked a little earlier than most of the other jurisdictions," said Chait of the Montgomery assessment office. "Usually, the high end reacts first, so when the market slowed, it slowed first at the top end."

Montgomery Finance Director Jennifer Barrett said the smaller increase "is not going to have a significant impact at all."

In March, County Executive Isiah Leggett (D) must present the County Council with a spending plan that closes a $401 million shortfall, nearly 10 percent of the budget. But Barrett said the county had accounted for slower growth in the real estate market in its projections.

Moreover, she said, the high real estate assessments in past years "have built up a bank for us, so we're not terribly concerned over the short term."

For more information about the Homestead Property Tax Credit or questions about your assessment, call the State Department of Assessments and Taxation at 410-767-4881 or visithttp://www.dat.state.md.us.