Property tax assessments down, bills still up in the air

Decrease in home's value might not meet similar drop in amount owner has to pay

Wednesday, Feb. 3, 2010

It's been four weeks since the disappointing news came down from the state that all but six of the 18,344 Charles County homes assessed last year dropped in value, with the county as a whole seeing a 28.2 percent drop.

But it will be months before those homeowners find out whether or not that means a break on their tax bills.

"We won't know anything until April or May … until the state sends us most of their information," said County Treasurer Jerome Peuler. "The commissioners then determine the tax rate. Then the billing goes out in July. So the community won't know anything about the taxes until mid-June."

Even then, Peuler said, it will be hard to say how each bill will look because of the many factors that go into property tax totals, some of which depend directly on the homeowner.

"There's no one-size-fits-all," the treasurer said.

State and fire taxes, the constant yield tax rate — currently $1.026 per $100 of assessed value and the personal property tax rate of $2.405 per $100 on business real estate and inventory — and Maryland Homestead Tax Credit all go into the sum of the property tax bill, Peuler explained. He added that preparing a bill is like baking a cake; there are a number of ingredients that must be measured and added in order to make something that's palatable.

"It's got to be fair and equitable to the whole population and be as gentle and realistic as possible," Peuler said.

That's a tall order, however, when considering the three-year slump in the housing market and the sobering numbers from this most recent assessment for a third of Charles County residents.

In January, the Maryland Department of Assessments and Taxation announced that the county's residential property — primarily the St. Charles and Waldorf neighborhoods — lost $1.7 billion in value thanks to the 28.2 percent drop.

The total percentage of residential improved properties in Charles County that decreased in value was 99.97 percent.

There was a 6.3 percent jump in Charles County's commercial cash value but it will only generate $122 million.

Including commercial properties, 92.68 percent of the area of Charles County assessed this year decreased in value.

Only seven of the other 23 counties had a higher total percentage drop. Frederick County held the top spot with a 96.46 percent loss.

The state averages fared better, with the change in total full cash value at minus 19.7 percent. The average percentage of residential properties that decreased in value across 24 jurisdictions is 93.35.

"Property values went up substantially between 2003 and 2006," said Robert Farr, supervisor of assessments at the Charles County office of state assessments. "The [2010] reassessment was done over two recession cycles, so it appears as a negative number on tax bills."

The local office was tasked with surveying the homes in the Charles County assessment area, and like Peuler, Farr acknowledged that most everything about a home and its corresponding property tax bill is done on a case-by-case basis.

The assessors approach each property by looking at the condition of the home, whether any changes or additions occurred over the course of the three-year assessment cycle, and other documents and resources that include descriptions of the property.

Farr said the home under assessment is also compared to homes that have been sold recently and those that have not.

"One of the things people get confused with is assessment values and appraisal values," Peuler said. "Assessments are done by the state to put taxes on property. It depends on supply and demand. Appraisals are done by real estate companies."

Like the six homeowners who will see their home value jump this assessment cycle, Woodville Road resident Ludwig Heilmeier received similar news last year.

While the portion of the county assessed for 2009 had a full cash value change of minus 4.6 percent, Heilmeier saw his home value rise — something that's happened since he's lived in this particular house since 2003.

Aside from a 6-foot-by-10-foot roof added for a porch about two years ago — for less than $4,000 — he's done nothing to alter the home, which is just two miles from the Prince George's County border.

Because the county commissioners voted last year to maintain the current property tax rate and not roll back the assessed value to 96.4 cents per $100, Heilmeier has had to use his wallet to bridge that gap while also answering to rising home worth.

"I'm not in the same boat [as residents with lower assessments] but I've got a double whammy," Heilmeier said.

With the assessments complete for this cycle, it's time for county number crunchers to begin factoring credits and other taxes to arrive at the final bills.

One of the major issues will be whether the state Homestead Tax Credit, which has historically been a helping hand for residents, has turned into a burden.

Enacted by the state to act as a buffer for homeowners in case of soaring assessment values, the tax credit puts money into the hands of residents whenever there is an increase that exceeds 10 percent at the state level and 10 percent or less at the county level.

It's up to each county to determine its credit cap. Charles County has set a 7 percent limit, along with Allegany and Carroll counties. Calvert, Montgomery Somerset and Wicomico counties hold theirs at 10 percent.

While the tax credit has helped during boom times it is proving to be a kick while the market's down.

Last year, Mechanicsville resident Beverly Long received news that the state had assessed her home $100,000 less than the last time.

Her first assumption was that while her house might not be worth as much as before, at least her tax bill would be proportionately lower.

"When I got my tax bill in July I almost had a heart attack," Long said. "We had been knocked out of the Homestead Credit. In fact, we owed $400 more."

What had happened is similar to the example Farr gave of what some residents could see in their property bills come the spring, and an event Long is hoping residents are bracing themselves for.

Six years ago when a home originally worth $100,000 was assessed at $200,000 the taxable amount was $150,000. That $50,000 difference, multiplied by the 1 percent tax rate creates a $500 credit for the homeowner.

But this assessment cycle, that now $200,000 home dropped in worth by 28 percent, making the percentage difference $144,000 — 72 percent — and placing a paying credit on the $150,000 which wipes out any earlier homestead tax credit.

"This was our dream home that's become a nightmare," Long said. "I know things cost money, but there's gotta be a happy medium."

msomers@somdnews.com