AGENDA ITEM #3A
May 5, 2015
Introduction
MEMORANDUM
May 1,2015
TO:
FROM:
SUBJECT:
County Council
Josh Hamlin, Legislative
Attome~
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Introduction:
Bill 21-15, Finance - Renters' Property Tax Relief Supplement
Bill 21-15, Finance - Renters' Property Tax Relief Supplement, sponsored by Lead
Sponsor Councilmember Eirich is scheduled to be introduced on May 5, 2015. A public hearing
is tentatively scheduled for June 9 at 1:30 p.m.
Bill 21-15 would require the Director of Finance to pay a Renters' Property Tax Relief
Supplement to certain residents who qualify for a payment from the State under the State "Renters'
Tax Credit Program" (see ©4-8). The State payment to renters is modeled after the Homeowners'
Tax Credit (commonly referred to as the "Circuit Breaker"), and is based on the premise that a
portion of rent paid by renters is attributable to property tax paid by the owner of the property.
The purpose of the State payment is to return some of that money to renters in the same way it is
returned to homeowners through the Circuit Breaker payment.
Bill 21-15 would create a supplemental payment similar in character to the County
supplement to the Circuit Breaker payment under Section 52-11A of the County Code. Eligibility
for the County supplement would be tied to eligibility for the State payment. The County
supplement under the Bill would be 50% of the State payment, which is capped at $750.
This packet contains:
Bi1l21-15
Legislative Request Report
State Program Information
Circle #
1
3
4
F:\LAW\BILLS\1521 Renters Tax Relief Supplement\Intro Memo.Docx
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Bill No.
21-15
Concerning: Finance
Renters'
Property Tax Relief Supplement
Revised:
1/12/2015
Draft No.
_1_
Introduced:
May 5,2015
Expires:
November 5,2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ...:.N.:,::o:::,.:n.=..e_---,-_ _ __
ChI _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember EIrich
AN
ACT
to:
(1)
(2)
require the Director of Finance to pay a Renters' Property Tax Relief Supplement
to certain residents who qualify for a certain payment under State law; and
generally amend the law governing the Renters' Property Tax Relief Supplement.
By adding
Montgomery County Code
Chapter 20, Finance
Article XV, Renters' Property Tax Relief Supplement
Section 20-82
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law
by
original
bill.
Deletedfrom existing law
by
original
bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL No. 21-15
1
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Sec. 1. Article XV (Section 20-82) is added to Chapter 20 as follows:
ARTICLE XV. Renters' Property Tax Relief Supplement.
20-82.
Renters' Property Tax Relief Supplement.
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The Director of Finance must
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Renters' Property Tax Relief
Supplement to each resident who qualifies to receive
~
payment under
the State property tax relief program for renters established under
Section 9-102 of the Tax-Property Article of the Maryland Code.
(Q)
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For each taxable year, the Supplement to each eligible resident under
this Section equals 50% of the State payment to the resident.
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The Director may require each eligible resident to submit an
application for the Supplement, and may take any other action
necessary to administer the Supplement.
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The County Executive may issue regulations under method
administer this Supplement.
ill
to
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Approved:
16
George Leventhal, President, County Council
Date
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Approved:
18
Isiah Leggett, County Executive
Date
19
This is a correct copy ofCouncil action.
20
Linda M. Lauer, Clerk of the Council
Date
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F;\LAW\BILLS\1521 Renters Tax ReliefSupplement\BiIIl.Doc
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LEGISLAriVE REQUEST REPORT
Bill 21-15
Finance
-
Renters' Property Tax ReliefSupplement
DESCRIPTION:
Bill 21-15 would require the Director of Finance to pay a Renters'
Property Tax Relief Supplement to certain residents who qualify for a
payment from the State under the State "Renters' Tax Credit
Program." The County supplement would be 50% of the State
payment, which is capped at $750.
Renters indirectly pay the property tax on their residences through
their rent payments. There is a State program, similar to the State
Homeowners' Property Tax Credit, which returns some of this money
to renters. Unlike homeowners, there is no County supplement.
Treat renters more equitably by supplementing the State payment
approximating the amount of property tax they pay indirectly through
rent, similar to what is done with the County supplement to the State
Homeowners' Property Tax Credit
Department of Finance
To be requested.
To be requested.
To be requested.
To be researched.
Josh Hamlin, 240-777-7892
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENAL TIES:
nJa
F:\LAw\BILLS\1521 Renters Tax ReliefSuppiement\LEGISLATIVE REQUEST REPORT.Docx
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Renter's Tax Credit
Page 1 of5
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Phone Directory
State Agencies
Find services, agencies and more
Renters' Tax Credits
The Renters' Tax Credit Program provides property tax credits for renters who meet certain
requirements. The plan was modeled after and designed to be similar in principle to the Homeowners'
Tax Credit Program, which is known to many as the Circuit Breaker Program. The concept rests on the
reasoning that renters indirectly pay property taxes as part of their rent and thus should have some
protection, as do homeowners.
The plan is based upon the relationship between rent and income. If the portion of rent attributable to
the assumed property taxes exceeds a fixed amount in relation to income, the renter can, under
specified conditions, receive a credit of as much as $750. The credit is paid as a direct check from the
State of Maryland.
HOW A RENTED DWELLING IS DEFINED
The rented dwelling may be an apartment in an individual house or any type of apartment building,
duplex, co-op, condominium, house trailer, or mobile home pad. The dwelling must be the principal
residence in Maryland and the renter must live there at least six months of the year. You are only
eligible to receive a tax credit for rent paid in the State of Maryland.
The applicant must have a bona fide leasehold interest in the property and be legally responsible for the
rent. If the dwelling that is rented is owned by a tax exempt, charitable organization or is exempt in any
way from property taxation, a tax credit cannot
be
granted.
HOW TO DETERMINE IF YOU MAY BE ELIGIBLE
COMBINED INCOMES: Credits are calculated according to total income, meaning all combined gross
household income before deductions. This includes income from all sources, whether or not taxable for
federal and state income tax purposes. It also includes Social Security as well as all other retirement
benefits .
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Renter's Tax Credit
Page 2 of5
AGE 60 OR OVER OR 100% DISABLED
If you are age
60
or over or
100%
disabled, use the chart below to determine if it is worthwhile for you to
file an application.
Note: A surviving spouse of one who otherwise would have been eligible also qualifies.
CHART 1
1.
Find your approximate
2014
total gross household income in Column A.
2. If your monthly rent is
more
than the figure in Column
B
across from your income, you
may
be eligible
and are encouraged to apply.
Column A
Column B
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'\·lTotallncome Monthly Rent
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II
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$1 - 5,000
6,000
7,000
8,000
9,000
10,000
11,000
II
II
II
II
14
28
42
56
86
117
147
178
219
261
303
544
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II
II
II
II
II
II
II
II
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12,000
·13,000
14,000
15,000
20,000
25,000
30,000
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The rent in Chart 1 assumes that you pay all your own utilities separate from the monthly rent. If the rent
includes gas, electric and heat, you may need to have as much as 18% higher monthly rent to qualify
for a credit.
Trailer park residents are advised to submit an application and allow this office to determine eligibility.
Chart 1 is a guide only, and the exact amount of your income and rent will be used to determine your
eligibility. If you submit an application, the State will determine your eligibility.
UNDER 60 YEARS OF AGE
If you are a renter under the age of
60
who, during
2014,
had at least one dependent under the age of
18
living with you AND you did not receive federal or state housing subsidies or reside in public housing
AND the combined income of all residents of your dwelling is below the following guidelines, you are
encouraged to apply.
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Renter's Tax Credit
Page 3 of5
CHART 2
Persons in
Household
(Include Applicant)
2014 Gross
Income Limit
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2
3
4
5
6
7
8
9
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$16,057
18,552
23,834
28,265
31,925
36,384
40.484
48,065
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and income (See Chart 1).
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Note: If you think you qualify based on the income limits on the above chart, you are encouraged to
apply. The State will determine your eligibility using the above chart and the formula that compares rent
WHEN AND HOW TO APPLY
Renters have until
September 1
of the year in which the credit is sought to apply, but
it
is advantageous
to file as early as possible.
The standard form on which to apply is provided by the Tax Credits Office of the State Department of
Assessments and Taxation.
Applications can be obtained any time after February 1 from your local assessment office or by calling
the Tax Credits Telephone Service at 410-767-4433 (Baltimore Area) or 1-800-944-7403 (Toll Free).
Use this link to download and print a PDF copy of the Renters Tax Credit Application
HOW TO ESTIMATE THE TAX CREDIT
The property tax relief a renter may receive is based upon a comparison of the assumed real property
tax in the yearly rent minus a percentage of the household income as shown here:
0%
of the first $4,000 of income
2.5% of the next $4,000 of income
5.5% of the next $4,000 of income
7.5% of the next $4,000 of income
9.0% of all in excess of $16,000
Estimating your own tax credit can be done by taking these three steps. Remember, the key to the plan
is your rent in relationship to your income.
The plan assumes that 15% of your occupancy rent goes toward the payment of property taxes.
Occupancy rent does not include charges for heat, utilities, or any other fees paid with the rent.
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Renter's Tax Credit
Page 4 of5
Step 1:
Find your 2014 income and tax limit from the chart in the next column.
Example: If your income is $11,000, your tax limit is $265.
Step 2:
Take 15% of the total occupancy rent for the year 2014.
Example: A monthly rental of $300 would amount to $3,600 a year. Fifteen
percent of $3,600 is $540.
Step 3:
Subtract your tax limit amount from the assumed property tax.
Example:
$540 15% of occupancy rent
-$265 tax limit from chart
$275 amount of
tax
credit
The $275 difference is the amount the renter would receive as a tax credit.
The amount of the renters' tax credit will vary according to the relationship between the rent and
income, with the maximum allowable credit being $750. Those found eligible for a credit as determined
by the State Department of Assessments and Taxation will receive a check directly from the State
Treasury. Anyone who is found ineligible will be notified in writing and given the reason why.
IMPORTANT: If 15% of your occupancy rent is more than the tax limit amount shown on the schedule
below for your income, you are urged to fife a Renters' Tax Credit application.
2014 Combined
Income
ITax
Lim~1
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II
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$0
25
50
75
100
155
210
265
320
395
470
545
620
710
800
890
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$ Ot04,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
19,000
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Renter's Tax Credit
Page 5 of5
20,000
II
980
For each additional $1,000 of
income, add $90 to $980 to find
the tax limit.
Applications should be mailed to:
State Department of Assessments & Taxation
Renters' Tax Credit Program
301
W.
Preston Street, Room 900
Baltimore, Maryland 21201-2395
Contact Us
Privacy
Site Map
Email SDAT
301 W. Preston Street, Baltimore, MD 21201
410-767:-11841 Toll Free in Maryland 888-246-5941 1Maryland Relay 800-735-2258