MACo Offers Amendments to Bill that Requires Property Tax Credit for New Home After Acquisition through Eminent Domain

Maryland Association of Counties Associate Director Andrea Mansfield testified on SB 413 before the Senate Budget and Taxation Committee offering to work with the sponsor on amendments to the bill.  This bill would require the State and local governments to grant a property tax credit for a replacement home purchased by a homeowner who is displaced through eminent domain.   The amount of the credit is equal to the difference between the taxable assessment of the acquired dwelling and the taxable assessment of the new dwelling, multiplied by the State, county or municipal property tax rates.

Under current law, local governments have the option to grant a property tax credit for this purpose.  However, it can not exceed 100% of the property tax attributable to the eligible homestead assessment granted on the home taken through eminent domain in the first taxable year.  It is then reduced by 20% in each subsequent year over the five-year life of the credit.

In her testimony, the sponsor of SB 413, Senator Catherine Pugh, expressed concern for elderly individuals, who may have lived in their homes for 30 years.  She said an individual in this circumstance who is displaced through eminent domain, may not be able to afford the property taxes on the replacement home after the five-year phase-out of the existing credit.  Therefore, she wants to eliminate the phase-out and make the credit permanent.

While, MACo understands the sponsors concerns, it does not want this property tax credit to be mandatory.  MACo suggested that the bill be amended to give local governments the option to structure this credit in a manner that best serves their jurisdiction.  With this approach, a jurisdiction could establish the most appropriate time frame and other parameters of the credit.

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