Homeowners will get break if property values increase
Homestead credit caps taxes on home assessments
For the first time in 20 years, Prince George's County homeowners will not have to pay more in property taxes based on any increase in their property's value.
The Homestead Property Tax Credit, which has been around since 1977, is designed to reward people who live in their homes by capping the taxes on property value increases. While property assessments have sometimes jumped as much as 20 percent per year, the Homestead credit has capped the taxable assessment in the county at 5 percent.
The credit fluctuates based on the consumer price index. Since 1991, the cap has floated between 1 to 5 percent in Prince George's County. But for the first time, the consumer price index has gone down, legislative officials told the County Council last week, so there will be no allowed increase in home values to be taxed.
"I can't recall this happening before," said William Hunt, legislative auditor for the council.
The move will likely save the average homeowner about $115 next year on their bill. The new legislation would take effect July 1.
The council is required to update legislation regarding the tax credit every year by Nov. 1 and is expected to hold a public hearing Tuesday on the bill, CB 51.
Based on tax rates and declining assessments, the county's property tax revenue was already expected to decrease by about $312 million next year, according to a county financial report. The inability to tax on any property value increases is estimated to cause the county to lose an additional $34 million.
Council members have declined to comment. Jonathan Seeman, director of the county's Department of Management and Budget, would not comment when asked about strategies for absorbing the loss.
Prince George's County leaders have struggled with budget shortfalls since 2007 because of declining real estate values and slow home sales. This year, the county furloughed employees and cut departments to make up a $113 million deficit.
E-mail Daniel Valentine at email@example.com.