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Understanding Your Property Assessment Notice

OMG – looks like our property assessment went up 40%, how will we pay our taxes?!

Quick Answer:

It may or may not change the amount you owe in taxes because:

  • Any increase in assessment is phased in over three years.
  • There is a 10% increase cap for owner-occupied residential properties in Takoma Park after the first year of ownership if you have the Homestead Property Tax Credit.
  • The amount of tax to be paid depends on the amount of the combined tax rates set by the State, County and City each year in the spring; the rates for County and City taxes change each year, sometimes increasing and sometimes decreasing.
  • There may be credits available to reduce the amount of tax owed for a particular property.
  • You can Challenge/Appeal if you think the property tax value doesn’t reflect the current market value.
  • Tax rates are not assessed until the State of Maryland, Montgomery County, and the City and County Council of Takoma Park adopt their respective rates in May 2019.
  • To assist homeowners who are affected by large assessment increases, Montgomery County limits the annual taxable assessment increase to 10% for principal residential properties.
Helpful Links:

The assessed values displayed in the maps do not reflect phased-in assessments, tax credits or tax-exempt status which may be applied to the tax due on a property.

Owners of property in the Takoma Park area will be receiving updated property assessment notices from the State of Maryland in December. Assessments are done every three years. The full amount of the assessment is not necessarily the same amount upon which tax rates are computed, particularly for owner-occupied residential properties. Tax rates are not set until the City and County Councils adopt their respective rates next May. Frequently when assessments go up, tax rates go down, as Councilmembers consider the impact of tax payment amounts on their constituents. Read below for more info!

Q: What is an assessment notice?

A:  The assessment notice issued by the Department of Assessments and Taxation informs the property owners of the relationship between the old and new market value. Of all the figures on the notice, the single most important figure is the total new fair market value. This is the new appraisal estimate of both land and buildings (improvements). The new fair market value shown on the notice may be appealed (see below for more in this). Appeal deadlines and instructions are provided with the notice.

Q: How is the assessed value determined?

A:   An assessment is based on an appraisal of the fair market value of the property. An appraisal is an estimate of value. Assessors are the appraisers who estimate the value of the property for tax purposes. Assessors are trained to use standard appraisal approaches and techniques to determine the appraisal estimate. There are three accepted approaches to market value:

  1. the sales approach,
  2. the cost approach, and
  3. the income approach.

While differing in the method of calculation, each approach is designed to indicate the property’s fair market value.

How are real property taxes determined?

The State Department of Assessment and Taxation released the real property tax assessments effective January 1, 2019. The maps below show the assessed value on real properties. These assessed values do not reflect phased-in assessments, tax credits or tax-exempt status which may be applied to the tax due on a property.

An interactive map displaying this data is located here. 

 

Property taxes are determined by two factors: (1) the total assessment value of the property (land and improvements) and (2) the property tax rate that is established by each taxing jurisdiction. In Takoma Park, taxing jurisdictions include the State of Maryland, Montgomery County and the City.

Assessments are based on the fair market value of the property and are issued by the Department of Assessments and Taxation, an agency of state government. Properties are reassessed once every three years and property owners are notified of any change in the assessed value of their property in late December. Properties in Takoma Park are scheduled to be reassessed in 2018.

Property tax rates are set by each taxing jurisdiction and may vary widely. No restrictions or limitations on property taxes are imposed by the State of Maryland, which gives cities like Takoma Park and Montgomery County the discretion to set tax rates at the level they require to fund governmental services. Property tax rates are expressed as a dollar amount per $100 of assessment.

 

How is my property tax bill calculated?

Individual property tax bills are calculated using the following formula.

ASSESSMENT VALUE divided by 100 and multiplied by the PROPERTY TAX RATE

FOR EXAMPLE: For a property in Takoma Park with a fair market value of $100,000, the property taxes would be calculated by dividing the assessment by 100 and multiplying the product by the property tax rate established each jurisdiction. The amount of property taxes due would be calculated like this:

Taxing Jurisdiction Assessment Value Property Tax Rate Property Tax
State of Maryland $100,000 0.1120 $112.00
Montgomery County $100,000 0.9927 $992.70
City of Takoma Park $100,000 0.5291 $529.10
  EXAMPLE TOTAL PROPERTY TAX BILL $1,633.80

Q: How does my assessed value impact the taxes I pay?

A:   Real property tax rates are set each year by the Montgomery County Council and the Takoma Park City Council. Property tax is an ad valorem tax, meaning it is applied to the assessed value of the property. The real property tax is levied annually on all taxable land and improvements. Real property tax is calculated by multiplying a property’s assessed value for tax purposes by the established tax rates (per $100). This must be done for both the County’s tax rate and the City’s to equal the total real property tax owed to each jurisdiction.

All property in the County is subject to taxation, except that which is specifically exempt. Each property is assessed every three years by the State Department of Assessments and Taxation (SDAT) and  certified to the County for tax billing purposes. For more details about your assessment visit SDAT at dat.maryland.gov or call 240-314-4510.

Q: How do I contest my assessment if I think it is incorrect?

A:   If the estimated value of your property does not accurately reflect what you believe to be its current market value, you can initiate the Assessment Appeals Process available through SDAT.

Appeals may be filed on three occasions:

  1. upon receipt of an assessment notice;
  2. by a petition for review; and
  3. upon purchase of property between January 1 and June 30.

There are three options for an appeal:

  1. personal hearing,
  2. phone hearing, and
  3. written appeal.

Appeals made in writing eliminate the need to attend a scheduled hearing or to call in by phone; SDAT attempts to prioritize appeals made in writing. If you decide to file an appeal, the first step is to file it either online or by replying to the Notice of Assessment by signing and returning the appeal form.

Appeals must be filed within 45 days of the notice date.

Please note: Obligation to pay taxes is not stayed or suspended pending an appeal.

Q: Where can residents look for tax credits?

A:  The State, County and City offer many tax credits and exemptions against the real property tax for which you may be  eligible. Here is a quick summary of some of the more common  credits for which you may be eligible. There are a number of other credits you may be eligible for as well. For more information, go to  https://www.montgomerycountymd.gov/finance/taxes/tax_credit_exempt.html

 

  • Homestead Property Tax Credit –
    To assist homeowners who are affected by large assessment increases, the State of Maryland, Montgomery County, and Takoma Park limit the annual taxable assessment increase to 10% for principal residential properties. This limit, called the  Homestead Credit, is not applicable the first year following the purchase of a home, and therefore the taxable assessment may be higher than it was for the previous owner. Property owners are required to file a one-time application with SDAT which administers this credit. To learn more about the program, visit SDAT at dat.maryland.gov/realproperty/pages/maryland-homestead-tax-credit.aspx or call 866-650-8783.

 

  • Homeowners Property Tax Credit –
    Maryland Homeowners Property Tax Credit and Montgomery County supplement are administered by SDAT.  These tax credits are granted to eligible homeowners of all ages, with the exception that taxpayers age 70 and older may file three years retroactively. Applications must be filed by Sept. 1. The program provides tax credits for homeowners who qualify on the basis of their household income compared to their tax bill. For more information or to obtain an application, visit SDAT at  dat.maryland.gov/

 

  • Senior Property Tax Credit –
    The County offers a property tax credit for senior residents, based on 50% of the combined State and County Homeowners Property Tax Credit. This credit is available to residential property owners when one of the owners is at least 65 years of age. If you applied for the Homeowners Tax Credit, SDAT has the age information to determine eligibility, and there is no need to apply for this credit separately. However, you must apply for the Homeowners  Property Tax Credit to be considered. For specific questions about this program, call SDAT at 800-944-7403.

 

  • Elderly Individual / Military Retiree Tax Credit –
    For property owners aged 65 and over who either (1) have owned and lived in their home for the last 40 consecutive years or (2) are retired from one of the United States’ armed forces, including military reserves, the National Guard, and the uniformed corps of the Public Health Service and the uniformed corps of the National Oceanic and Atmospheric Administration. For information about this five-year tax credit, call 240-777-0311.

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