Homestead Tax Change Could Have Big Impact On Shore

State officials this week began checking for and potentially penalizing Homestead Tax Credit scofflaws, and perhaps nowhere in the state could more offenders be found than in Worcester County.

Last spring, the Maryland General Assembly passed a new law providing a mechanism for penalizing property owners who misrepresent a property as their primary residence in order to take advantage of state and local Homestead Tax Credit rates. In Maryland, resident property owners are protected somewhat from exorbitant increases in their property values by setting a cap on the amount of increase on which they can be taxed.

The state sets its limit at 10 percent, while individual counties can set their caps at any rate lower than 10 percent, or even zero in some cases. In simpler terms, if a property is the primary residence of the owner, the most they can be taxed on an increase in the value of that property is 10 percent. In Worcester, county officials a few years back set the Homestead Cap at 3 percent, while Wicomico just this year dropped its cap from 10 percent to 5 percent.

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