Baltimore Property Assessment Increase > 60% - Help! (North Beach: real estate, assessors)

[North Beach Person]

Originally Posted by bndj88

Hello all! Really hoping you can provide some advice because my wife and I are about to get eaten alive by a property tax assessment increase.

We just bought a house in Riverside. Our first home, lots of family history in the neighborhood, rooftop deck. We were so exited. The house was assessed for around $180K (which I admit is well below its market value) for the entirety of the time we were looking at it up to closing. We settled on the house on December 30, 2014 for around $280K.

Less than a week later I checked the property record on the SDAT website to see if it had been updated to our names (no way, I know, but again we were excited). No, the deed hadn't been transferred, but I did notice that the assessment had changed. As of January 1, 2015, aka TWO DAYS AFTER WE CLOSED, the property is now assessed for over $290K. Yes, that is an increase of 62% in assessed value in two days of home ownership! Given Baltimore city tax rates, even with a three year phase-in we are looking at paying many thousands more dollars than we had rightly planned.

The kicker: my wife and I are totally eligible for the Homestead Tax Credit which limits the payment increases due to assessment increases to no more than 4% per year. The previous owner did not have the Homestead Tax Credit on the property when he owned it because it was not his primary residence, so I guess during the period the city assessed it, there was no Credit. However, WE are the ones who have to PAY this monstrous increase, and we ARE eligible for the credit! And yes, we mailed in a Homestead application ASAP upon seeing the new assessment.

How can it be that we can be punished so severely for the previous owner's choices? The assessment is dated January 1, 2015, when WE were the owners. If we are eligible, shouldn't this increase be void? We bought the home in good faith with the assessment where it was, assuming a maximum 4% per year increase. Yes we knew it was a favorable assessment but still; it was what it was and we should have Homestead protection. We based family financial decisions on that protection. Now we are looking at a 62% increase over the first three years instead of a maximum of 12%.

Can anyone provide any advice in fighting this? Getting the assessment lowered about $10K because it is more than we paid should be straightforward on appeal (I hope). But really I want them to retroactively apply the Homestead for us so our increase is 4% in year one, not 20.75%. We love Baltimore so much and are so happy to have escaped DC and returned home, but it feels like we are being greeted with a slap in the face and a swipe to our wallet. Please help and thanks!

You bought a house for $280K that was assessed at $180K (you got hit with the new round of assessment on that).

Even if the new assessment wasn't increased the new one would have been adjusted to your purchase price and it wouldn't phase in.

You can appeal but you'll be out of gas since you paid the new assessment for the house and will be denied.

You are not eligible for the Homestead exemption until next year, the requirement is to have one year of residence before eligibility to discourage flipping.

[North Beach Person]

I have to ask why you paid so much over assessment?

[cjmeck]

Originally Posted by North Beach Person

You are not eligible for the Homestead exemption until next year, the requirement is to have one year of residence before eligibility to discourage flipping.

Is this requirement something specific to Baltimore City?

[MrRational]

Originally Posted by bndj88

The house was assessed for around $180K (which I admit is well below its market value)
We settled on the house on December 30, 2014 (paid 50% more) for around $280K;
TWO DAYS AFTER WE CLOSED, the property is now assessed for over $290K.

Are you wondering where they got the other $10,000 from?
Or are you complaining that you bought at a slight discount?

[North Beach Person]

Originally Posted by cjmeck

Is this requirement something specific to Baltimore City?

Nope, that's statewide. You register as soon as you can after closing to get the clock started but you have to be in a minimum of a year to qualify for the exemption.


http://www.dat.state.md.us/sdatweb/homestead.html

I see it's now 6 months residence.

[pwduvall]

Originally Posted by North Beach Person

You bought a house for $280K that was assessed at $180K (you got hit with the new round of assessment on that).

Even if the new assessment wasn't increased the new one would have been adjusted to your purchase price and it wouldn't phase in.

You can appeal but you'll be out of gas since you paid the new assessment for the house and will be denied.

You are not eligible for the Homestead exemption until next year, the requirement is to have one year of residence before eligibility to discourage flipping.

My understanding is that the assessors are allowed to reassess a recently purchased houses to the purchase price but they don't always do it. I hope the assessment appeal doesn't wake them up in this case. With a little luck bndj88 may be paying taxes on about $225K and not 280K in a couple of years.

[cdmoore125]

Originally Posted by bndj88

Thanks, cdmoore125. I saw on the property tax website that you can appeal upon purchase if you buy between January 1 and July 1 of the year. I closed on December 30, so I'm two days shy! Do you know if there is a real reason for that rule, or is it just arbitrary bureaucracy?

Yes, I have seen the threads on here about appeal and I intend to do that. The issue here is that the appeal would likely only help me get down around $10K to my purchase price, which would still be a 57% increase.

Can you elaborate on what you mean when you say that I should have gotten a new assessment?

While you closed Dec 30, I bet it wasn't recorded until after the new year. Which means you might be able to. You can see the date on SDAT.

And the assessment comes in the mail. I was away when mine came.

[North Beach Person]

Originally Posted by pwduvall

My understanding is that the assessors are allowed to reassess a recently purchased houses to the purchase price but they don't always do it. I hope the assessment appeal doesn't wake them up in this case. With a little luck bndj88 may be paying taxes on about $225K and not 280K in a couple of years.

They started to really focus on sales a few years ago when revenues and assessments were falling.

My son bought a house this time last year which was assessed at over $300K. He paid something like $115K. Yes, you're reading that correctly. He immediately appealed the assessment and got it knocked down to $140K. He decided to let it go at that point (mostly because what he had to do in rehab would have put it up to @$130K anyway).

[bndj88]

Thanks cjmeck! Will call them after the record shows they at least have my application. Glad to hear something like this worked out OK for you recently. Appreciate the insight.

[bndj88]

Thanks North Beach Person. I didn't see that qualification before - 6 months of residency before you are eligible. Thanks for pointing that out to me, although I am pretty bummed to hear it! Really need to get people in my circle to stop saying blanket statements like "assessments are capped at 4% per cycle in Baltimore city" - tons of disclaimers on that I guess.

Glad I got the clock started now, hopefully I'll be able to lock in the first year phase-in assessment as my base for the 4% increases after I gain eligibility, not the full thing.

And to your question, the house had a crazy low assessment because the previous owner bought it as a foreclosure about three years ago, right in the last assessment cycle. It is a rehab, really nice place now. We definitely didn't overpay - the house was brought back up to market value for sure.

Question about assessors re-assessing upon sale. Is that a for sure thing? Or just something they might do? And would it be out-of-cycle I guess? Sure seems like that concept violates the spirit of Homestead doesn't it? "We'll cap your increases unless you are new here, then we'll jack you up right away and go slow from there." Although glad it worked out for your son in the opposite direction.