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County home assessments up 70 percent

Shellshocked homeowners weigh chances of appeal as deadline approaches

Wednesday, Feb. 1, 2006

When Michele T. ‘‘Mike” Tiglio opened his property tax assessment this year, he was shocked.

In just three years, the value of his Gaithersburg area home rose more than $197,000 to $575,730 — or 54 percent. If this continues, he figures his 2008 tax bill will come in at $7,100; last year he paid $4,900.

Still, at 54 percent, Tiglio’s assessment is lower than others in Montgomery County, where assessments have risen an average 70 percent since 2005. Include commercial properties, and the rate is 63 percent.

‘‘These figures show that the market speaks for itself,” said Daniel Ercolani, acting supervisor of the Maryland State Department of Assessments and Taxation.

In January, SDAT’s appraisers issued reassessments for one-third of the county, including Gaithersburg, Montgomery Village, Olney, Rockville, Colesville and Laytonsville.

Tiglio and his wife have lived in their Traxell Way home 10 years. They bought it for $275,000 and have made just a few improvements — adding on a deck and a shed in the back yard. At this rate, Tiglio figures his home’s value will more than double by 2008.

The average price for a Montgomery County home was $541,782 in December. Compare that to Fairfax County, Va., where last year’s average assessment increase for residential and commercial property was just 23 percent and the average home price was more than $425,000.

Tiglio attributes the increases in his neighborhood to costly new homes.

‘‘I was astounded because assessments don’t usually go up that much,” the retired broadcast union representative said. ‘‘For people buying and selling houses who can make a lot of money based on these numbers, it’s good. But I’m retired and don’t plan on selling, so for me the high assessments just mean more property taxes.”

Calculate your tax County and state tax rates for fiscal 2007, which begins July 1, have not been set yet. Divide home assessment by 100. Then multiply the answer by combined state and county tax rate (13.2 cents for state, 67.9 cents for county). Add WSSC charges and special area taxes (including transit, fire district, land acquisition, metropolitan, regional, recreation and storm drainage taxes, which vary by area). For help, go to www.montgomerycountymd.gov and click on ‘‘Services” on the left, then ‘‘Property Taxes.”

Rising assessments are ripoffs, Tiglio said, not only for people who have no intention of moving, but also for people looking to buy.

‘‘I have four daughters and two were buying houses. One daughter bid more than $5,000 over what the sellers were asking and the sellers threw out all of the bids even though they all were more than the asking price,” Tiglio said. ‘‘That’s one of the things that is helping drive the prices up: Sellers asking outrageous prices for their houses. Someone has got to do something.”

‘‘People bought into the market with interest-only loans, sellers can basically name their price for their homes, and with the low interest rates, many people refinanced and renovated their homes with home equity loans,” said real estate agent Maxine Schwartzman, who has sold homes in Montgomery County for 38 years.

She predicts that assessments will decrease in about 18 months, as the market settles.

Higher values — and taxes

Last year the County Council reduced the property tax rate by 4 cents per $100 of assessed value to meet the charter limit. With the reduction, a homeowner whose property was assessed at $400,000 saw a $180 savings.

But some residents said that was not enough.

‘‘Last year we recommended setting the [taxable assessment] cap at 5 percent because that is one of the factors that goes into calculating property taxes,” said Marvin Weinman, president of the Montgomery County Taxpayers League. ‘‘We tried to get a hearing called on the issue, to at least let the public speak, but it didn’t happen and the public was shut out.”

Weinman and his group are also concerned about what effect the increasing assessments and the resulting taxes on residents with no mortgages, whose homes are paid off, but who may be on fixed incomes. For them, paying the taxes can be a challenge.

Montgomery County Executive Douglas M. Duncan (D) has included a 9-cent cut in the county’s 67.9-cent property tax in his fiscal 2007 budget, a move that the County Council said it will support. If the rate is cut, it would be effective July 1.

‘‘I think we will hit the charter limit,” said County Councilman Steven A. Silverman (D-At large) of Silver Spring, referring to the council’s property tax projections this year. ‘‘We really have to look at the property tax rate, where the real debate will be about how does the rate offer relief.”

Silverman also has proposed expanding the county’s ‘‘circuit breaker” tax relief program.

Under that program, homeowners earning less than $55,000 a year receive a break on the first $300,000 of their home’s assessment. Last year, the council included the circuit breaker limits in a group of property tax initiatives, highlighted by a $116 credit on property tax bills.

‘‘I’m interested in property tax fairness,” said Silverman, a candidate for county executive. ‘‘We can expand the tax credits and still offer the flat rate refund.”

Gov. Robert L. Ehrlich Jr. (R) wants to trim the 13.2-cent state property tax rate by 15 percent, or 2 cents. He also plans to overhaul the Homeowners’ Property Tax Credit Program, which targets low-income homeowners.

For some people, the Homestead Tax Credit offers some relief. To qualify, a principal residence’s value must have increased more than 10 percent a year. According to the state tax office, more than 202,000 of the Montgomery’s 246,000 principal residences qualify for the Homestead Tax Credit, another indication of the rapidly increasing area assessments.

‘‘Property taxes should grow at the rate of inflation,” said Timothy L. Firestine, Montgomery County’s finance director. ‘‘While you’re seeing assessments going up 70 percent, there is no way the tax bill would go up 70 percent.”

Nor do increased assessments automatically mean a dramatic increase in tax revenues because estimates are based on the 10 percent cap Montgomery sets on property tax bills, Firestine said.

‘‘In the late 1980s when assessments decreased, it did mean fewer revenues because reductions take effect immediately,” he said. ‘‘They are not spread out over three years.”

To appeal or not to appeal

So what is a homeowner to do?

On one hand, higher assessments can mean higher resale values and more equity in the home. On the other, there are those rising tax bills.

‘‘There are people who come to me wanting to buy a house in the county and they have a set price in mind. Unfortunately, when I tell them how much it really costs to buy here, they can’t afford it,” said Schwartzman, the real estate agent. ‘‘And if they can afford to buy the house, sometimes they can’t afford to pay the taxes to stay in it.”

For some, the fight against higher property taxes begins with the assessment notice in January before the property taxes are due.

This year homeowners have until Feb. 13 to appeal their assessments to the state. Last year SDAT heard about 31,000 appeals statewide, about 6,000 of them from Montgomery County.

Should you appeal your assessment?

Ideal appeal candidates would be residents whose assessments are much higher than comparable homes in their area.

‘‘The only problem now is that for the most part, the values are pretty close to the fair market value because of the way things are going,” Schwartzman said. ‘‘If you’re going to challenge, you have to do your homework.”

Seven years ago, Schwartzman appealed her own assessment.

‘‘Being in the housing industry, I had a very professional presentation: charts, photos of similar homes in my area, statistics — everything. My appeal was still denied,” she said.

Instead of giving up, Schwartzman organized her neighbors who were also considering challenging their assessments. Together, the group presented its case to the appeals board.

‘‘We went in as a group,” Schwartzman said. ‘‘I told the [board] that they could turn me down, but not a whole neighborhood of angry residents.

‘‘We won our case,” she said.

But, Schwartzman added, ‘‘Now, with our taxes, even with the cap, they are much higher.”