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Maryland Property Taxes—Understanding Assessments and Appeals
Author: Velocity Title’s Co-Founder, G. Russell Donaldson, Esq.
If you own a property, then you should be familiar with property taxes. The Maryland Department of Assessments and Taxation manages and enforces the property assessment and property tax laws for the state. Sometimes, tax assessments can be confusing to understand—especially if you want to appeal. If you or your client believe that Maryland has over assessed your property—costing hundreds or even thousands in excess property taxes—here’s what you need to know:
How Property Taxes are Assessed
In Maryland properties are assessed every three years. As a general rule, assessments should mirror the overall real estate market in terms of the direction of property values. In other words, using the “sales approach” and the “cost approach” the state determines if values are going up and if so then assessments will go up. If, on the other hand, values are going down then assessments will go down. This happens without regard to actual Property Tax Rates going up or down.
Tax Rates and Assessment Overview
Tax Rates can vary by jurisdiction as there are no restrictions or limitations on property taxes imposed by the state, which gives cities and counties in Maryland the discretion to set tax rates at the level they require to fund their governmental services. These rates can increase, decrease, or remain the same from year to year. An average look at Maryland’s rates reflects an effective Tax Rate of $1.08 per $100 of assessed value. So, for example, for a property that’s value is assessed at $200,000 the annual tax for that property would be $2,160.
Notice of Assessment and AVM
If property values are increasing and your property tax assessments are on the rise then the state will “phase-in” that increase over a period of three years and you will be sent a Notice of Assessment. In determining what the assessed value should be, the state attempts to value your property using what is commonly referred to as an “Automated Valuation Model” or AVM. The problem is that the state’s model is an old and outdated model and has not been updated so it frequently results in significant over valuations. After the state completes its new assessment of the property using the AVM the state will issue an Assessment Notice to the homeowner reflecting the new valuation. If the property owner feels this assessment is too high, they have a right to appeal their assessment.
Appealing a Notice of Assessment
The Notice of Assessment contains an appeal request form which must be filed within 45 days of the date of the Notice. In preparing for your appeal you should have a well prepared portfolio of comparable properties that indicated that the real value of your property is lower than the state’s valuation. The first step will be meeting with a supervisor where it will be reviewed to determine if there are any errors on improvements listed for the property and if the assessment valuation is reasonable. If the property owner is not satisfied with the result of that meeting, they have the right to move up the ladder and be heard at the Property Tax Assessment Appeal Board. Finally, if the property owner is unsatisfied with the Assessment Appeal Board decision the property owner may appeal that decision to the Maryland Tax Court. From there a property owner may appeal again to the Circuit Court and on up ultimately to the Maryland Court of Appeals. I would recommend seeking competent legal advice if taking your case to the courts as there are numerous rules of the court that you need to know and navigate.
Working your way through an appeal can be somewhat complicated so make sure you have a full understanding of the process before advising real estate clients or undertaking the process on your own. If you have questions, you can visit the Maryland Department of Assessments and Taxation website here, or you can contact Velocity Title for assistance here.
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