Tax Assessment Message From the City Manager
From Suzanne Ludlow, City Manager of Takoma Park
Dear Takoma Park Residents,
Happy 2016! I hope the New Year finds you well and, for right now at least, bundled up against the cold.
My letter to the community for January is devoted to the subject of property tax assessments.
If you own real property in Takoma Park, you should have recently received an Assessment Notice from the State of Maryland providing information on the value of your land and any buildings on that land for tax purposes. Assessments are done every three years on a rolling basis across the State. All of Takoma Park is done at one time.
Receiving an assessment can often lead to some anxiety and confusion. I am not an assessment expert, but want to give you some general information that may help you understand what this information is and how it is used.
First, the State’s assessment of the market value of your property as of January 1, 2016 is in box 7 on the sheet you should have received in the mail.
Second, the amount you will pay in taxes on the property will be based on the amounts in boxes 1, 2 and 3 (or in box 8) times the associated tax rate set by the State of Maryland, Montgomery County and the City of Takoma Park and less any credits you may be eligible for. The Montgomery County Council and the Takoma Park City Council will vote on the tax rates for the 2017 Fiscal Year (that begins July 1, 2016) in May of 2016.
Market Value Amount
(from box 7)
As you look at the form you received, you may be concerned about the amount of the Market Value shown in box 7. If you feel the assessment is too high for your property, you can appeal it by following the instructions on the back of the form. If you want to see the Property Worksheet or Sales Analysis/Listing the State Assessment Office for Montgomery County used to establish the value of your property, you can request it, also by following the instructions on the back of the form. Go to the State’s Department of Assessment and Taxation website at www.dat.maryland.gov to learn more.
You may also be concerned if the assessment seems low. Generally, people don’t file an appeal for an assessment they feel is low, because they know that the assessment amount will affect the amount of tax owed. However, you may have other reasons for wanting the assessment number to be correct.
I will leave it to others more knowledgeable than I to determine if the State property assessment for a particular property seems accurate. On a personal note, in the past, I have asked a friend who works in a real estate office if the amount for my home was reasonable (she asked a few questions, then said yes). Two years ago, my husband and I had a professional appraisal done of our home as part of a refinancing. In reviewing the assessment notice we just received, I saw that it made sense given the appraisal that had been done. Mistakes can be made, however, so it is good to check.
What Will the Impact be on Taxes?
As noted above, the tax rates for next year will be set in May by the State, Montgomery County Council and Takoma Park City Council. Sometimes tax rates go up, sometimes they go down, and sometimes additional tax credits are authorized that affect a particular property.
There are provisions to help ameliorate the impact of greatly increased assessments on homeowners. The State spreads the increase over the three year period. In Montgomery County, if you have a Homestead Credit and the new Market Value increases more than 10% from your taxable assessment value from the previous year, your taxable assessment for the next year is capped at an increase of 10%.
If you are a homeowner and have lived in your home for at least a year, you should make sure you have, or see if you are eligible for, a Homestead Credit. Go to the State’s website to review the information for this and any other credit you may be eligible for. There is a special credit listed for lower income homeowners called the Homeowners Tax Credit that can reduce the amount you may need to pay in property taxes. (There’s also a Renters Tax Credit for renters, with more stringent eligibility requirements.) In past years, both Montgomery County and the City of Takoma Park have provided additional credits to residents who have the Homeowners Tax Credit. (The Takoma Park supplement to the Homeowners Tax Credit is done automatically, with no additional application required.)
To get to the website information on the Homestead Credit, go to http://dat.maryland.gov/sdatweb/homestead.html. For information on the Homeowners Tax Credit, go to http://dat.maryland.gov/sdatweb/htc.html.
What Does this Mean for the City of Takoma Park?
As the City Manager, I am always interested to see the information provided to the City around Valentine’s Day that gives the total assessable base and Constant Yield number for the City of Takoma Park. The total assessable base is the total value of real property in the City to which the tax rate can be applied for the coming year. (This number does not include tax exempt property and it only includes the assessment values shown in box 3 or 8 from the State Assessment forms, less an estimate of the amount that may be reduced because of tax assessment appeals and credits.) A computation is then done that shows what the City’s tax rate would have to be to receive the same amount of real property tax revenue as the City received in the previous Fiscal Year. That tax rate is called the Constant Yield.
If the assessable base has increased from the prior year, the City’s tax rate would have to be decreased to provide the same amount of real property tax revenue. If the assessable base has decreased, the City’s tax rate would have to be increased to provide the same amount of real property tax revenue. While the assessable base usually increases somewhat between assessments, the assessable base went down in Fiscal Year 2014 and Fiscal Year 2016, based on the last property assessment done three years ago. Property values were lower then in Takoma Park because of the impacts of the Recession and Congressional Sequestration.
The City Council sets the real property tax rate, as well as certain tax rates for some businesses. The amount of the real property tax rate depends on how much money is needed to provide the City services at the level that the Council feels is appropriate and maintain an adequate reserve, after estimates for revenues from other sources are considered.
In Maryland, municipalities are very limited in the types of taxes they can authorize. Municipalities get a share of county income tax (but can’t set their own rate), and can’t assess taxes on phones, property transactions, etc. that counties may. We can set user fees (for recreation classes, etc.) and fines (for parking violations, etc.). We also get some revenue from the State (such as Highway User Revenue and Police Aid) and from the County (tax duplication funds – a topic for another day!), as well as from grants that we pursue.
From now through March, City staff and I will be preparing a draft budget for City Council consideration. The proposed budget will be presented to the City Council on April 6, and there will be public hearings and Council work sessions in April and early May, leading to approval of a final budget in mid-May. The Council will want to hear from you on the types and levels of services to be delivered in the coming year and the amount of the real property tax rate to be assessed to help pay for those services.
In past years, the Council has been very concerned about the amounts of property tax assessed on lower and middle-income property owners in Takoma Park. The tax rate has stayed the same or been reduced most years. The one exception is for the current year, when the tax rate was increased from 57 cents per $100 assessed value to 58.5 cents per $100 assessed value to pay for phased-in increases in staff compensation. In addition to being conservative about the tax rate, the City has spent about $160,000 each year to provide a supplement to the State’s Homeowners Tax Credit, benefitting about 150 Takoma Park property owners.
To learn about and voice your opinion about the Montgomery County Budget, you may wish to attend a Budget Forum on January 20 at 7 pm in the Silver Spring Civic Center. To learn about and voice your opinion on the City of Takoma Park budget, watch for the information in the April edition of the Takoma Park Newsletter and share your comments in public or in writing while the Council is considering the budget throughout April.
In the meantime, I am happy to answer your questions about taxes and the City’s budget process. Feel free to contact me at: