Md. Assessments Reflect Downturn
Home Values Decline 3.4% in 3 Years, But Owners Can't Count on Tax Relief
Wednesday, December 31, 2008; Page B01
Many Maryland homeowners will see the softening real estate market reflected in lower property assessments mailed yesterday, although the change won't necessarily reduce their tax bills significantly.
According to the state Department of Assessments and Taxation, calculations performed this year showed that residential property values have dropped an average of 3.4 percent since those homes were last assessed in 2005. The dip comes after years of dramatic increases and is a sign that home prices have dropped in a stagnant market.
Even in some areas of the state where residential and commercial assessments conducted this year rose over those done three years ago, including Prince George's County, the increases were a far cry from the double-digit escalations of recent years. Assessments done this year were 4.9 percent higher than three years ago; assessments done last year were 51.6 percent higher than in 2004.
The drop would probably be steeper if assessments were compared with those from a year ago. Maryland's practice of assessing properties every three years tends to minimize the upswings and downturns of the real estate market.
The District will mail assessment notices in February. In Virginia, assessments are conducted at the local level, and the process varies across the state. Homeowners in Northern Virginia typically receive notices in the early part of the year. Arlington released its data yesterday, showing a 2 percent drop in residential assessments.
In Maryland, Montgomery County saw one of the state's most dramatic drops, with residential and commercial property values falling an average of 3.5 percent from three years ago. Home values fell an average of 16.3 percent in Montgomery.
In Montgomery, about 118,000 homes were reevaluated this year -- in Montgomery Village, parts of Rockville, parts of Silver Spring, Sandy Spring and Olney.
About 80,000 homes were assessed this year in Prince George's, mostly in Suitland, District Heights, Landover and Capitol Heights. James P. Soresi, supervisor of assessments for the county, said values held up better in Prince George's than in other parts of the state in part because the communities examined were some of the county's most affordable areas, where homes continue to sell at a fairly rapid clip.
"We still have a lot of sales activity," he said.
Many residents will see little change in their annual tax bills, regardless of the reassessment, because of the state's Homestead Tax Credit. The credit is designed to blunt the impact of rapidly rising assessments in hot real estate markets, setting a cap for the amount any homeowner's assessment can rise in a given year.
In years when assessments rise by less than the cap, however, increases from past years, deferred by the credit, are phased-in. As a result, many longtime homeowners see their assessments rise by about the same amount each year, regardless of new valuations.
In Montgomery, assessments cannot rise more than 10 percent in a year. In Prince George's, the cap is 5 percent, and in Anne Arundel County, where values dropped by an average 0.1 percent from three years ago, the cap is 2 percent.
"Don't be surprised," said David Platt, chief economist for the Montgomery Department of Finance. "Just because this assessment goes down doesn't mean your taxable assessment goes down."
In Howard County, assessments dropped an average 0.8 percent. Average values dropped by 1.5 percent in Charles but rose by 1 percent in Calvert County and 2.7 percent in St. Mary's.
Taxpayers should examine their assessment notice carefully to ensure that tax officials have properly noted whether a residential property is a primary residence; only owner-occupied primary residences qualify for the tax credit, Soresi said. He noted that taxpayers have 45 days to appeal assessments.
Staff writers Hamil R. Harris and Sandhya Somashekhar contributed to this report.