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County Homestead Tax Credit

The Homestead Tax Credit (HTC) limits the increase in taxable assessment each year to a fixed percentage. Every county and municipality in Maryland is required to limit taxable assessment increases to no more than 10% per year, and the State also limits the taxable assessment for the State portion of the tax to 10%. All municipalities in Montgomery County have adopted the 10% HTC limit, except for the Town of Kensington, which has a 5% HTC limit.

The credit applies only to owner occupied residential dwellings and is based on the total assessment for the land and the dwelling associated with the land. The credit does not limit the market value of the property. It is a credit applied against the tax due on the portion of the reassessment exceeding 10% from one year to the next. The credit is based on the 10% limit for purposes of the State property tax, and 10% or less for purposes of local taxation. In other words, the homeowner pays no property tax on the assessment increase which is above the limit.

There are certain conditions that must be met for credit eligibility:

  • The dwelling must be the owner's principle residence and the owner must have lived in it for at least six months of the year, including July 1 of the year for which the credit is applicable, unless owner is temporarily unable to do so by reason of illness or need of special care.
  • The property was not transferred to new ownership.
  • There was no change in the zoning classification requested by the homeowner that resulted in an increased value of the property.
  • A substantial change did not occur in the use of the property.
  • The previous assessment was not clearly erroneous.

Click here for more information on the Homestead Tax Credit from the Maryland State Department of Assessments and Taxation. Click here to go directly to the on-line Homestead Tax Credit application, or Click here to download an application to mail in.

 

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