How to Appeal Your Maryland Property Tax Assessment
Ever wonder why you get a notice from your lender every once in a while informing you that your escrow account is short and that to make up for it you’ll have a new, higher mortgage payment going forward? We get calls from clients all the time about this topic – people don’t know why something has changed. Are you stuck with this new number? What caused the shortage? And is there anything you can do about it?
So you get a letter in the mail in late December from the Maryland Department of Assessments and Taxation. Maybe you open it, maybe you don’t. I mean, it shows up during the holidays, your focus is on other things, and hey, doesn’t your mortgage payment take care of your property taxes anyway? So why is this so important right now? Maybe you’ll get around to it later. I’m not saying it’s a good idea to ignore these notices – just that it happens.
Most people figure out something important has changed when they get a follow-up notice from the company that services their mortgage. The notice lets you know that your escrow account doesn’t have enough in it and your payment will be going up to cover it. OK, so now it’s real. Your monthly mortgage payment is going up. But why? What happened?
How Maryland Assesses Properties
Every three years, the Maryland Department of Assessments and Taxation, in conjunction with your local county, reassesses your property to determine what your new tax assessment will be. That’s not the same as what the property might be worth on the open market – just how the state is planning to determine your property taxes. And don’t worry – it’s pretty consistent. It almost always goes up. Anyway, after the state finishes their assessment, about a third of the residents in each county get a notice that year. Each municipality is divided into three distinct areas – areas 1, 2, and 3 – and each area is re-assessed once every three years. So your assessment increases every three years, and that new amount is phased in over the course of the following three years, and then the cycle starts again.
Example: Baltimore County Assessment Areas
Very often when our clients receive these notices, they’ll call and ask why their payment just went up. It may not be especially obvious what caused the increase. In addition to the tax assessment increase, sometimes their homeowner’s insurance premium has gone up, but the tax assessment tends to account for the lion’s share of any escrow shortage.
So the next question, after “why,” is “what can we do about it?” What if you think the new assessed value is too high? That’s where the appeal process comes into play.
How To File An Appeal
On the back of the assessment notice you’ll find a form with the appeal procedure spelled out. When you’re an existing homeowner and you receive a new assessment at the end of December, you have until early February to file the appeal – within 45 days of the notice date. When you’re a new homeowner and you buy your home before June 30th, you can appeal the assessment within 60 days of the purchase for that current year. If you buy after June 30th, you can appeal for the following year.
To file the appeal, you can use the online Real Property Assessment Appeal Form. You’ll find the form at https://assessmentappeals.dat.maryland.gov/start.aspx. You’ll need a few pieces of information from the new assessment notice: the Notice # and Control # are in the box at the top right of the assessment notice.
When you file the appeal, you’ll have three choices: 1) submitting an appeal in writing only; 2) meeting via a telephone hearing; or 3) meeting personally with the assessor. All else being equal, our experience is that you stand a greater chance for success in having your appeal granted by choosing the hearing by phone or even an even greater chance with the in-person meeting, so we recommend the in-person meeting if you can.
What You’ll Need
When you prepare for your appeal, whether in writing or in person, you’ll need to include objective evidence that supports your claim that your assessment should be lowered. Homeowners should provide a set of comps, at least five, that show previous sales supporting a lower sales price. A good Realtor® who understands the market can help you determine the best comps to include. You’ll want listing and sales information as well as photos for the comps. You should also prepare a chart – think an Excel spreadsheet – that compares all the relevant data points: square footage, number of bedrooms, number of bathrooms, lot size, and so on. You’ll want the comps to be in a similar area and within the past 12 months. In addition to the comps and the chart, new buyers can also include a few additional items: the HUD-1 or closing disclosure settlement statement and the appraisal from the lender should also help support your argument.
What To Avoid
Here’s what the assessors won’t want to hear. They don’t want to hear grievances about your neighborhood, or the fact that your neighbors aren’t maintaining their properties, or that there’s too much trash, or rodents, or that the grocery store is closing down. They also won’t grant you a successful appeal based on the assessments of similar properties. It doesn’t matter if all the other units in your condo are the same size with the same features and your assessment is 20% higher than the other units. In fact, there’s case law on this issue – the solution for assessments and taxation may just be to increase the other assessments to match yours. So unless you want to have all of your neighbors hate you, don’t try to use the assessment approach. Stick with the comps.
The first level of appeal is with the county assessor. You’ll also receive an Area Sales Listing worksheet from Assessments and Taxation before the hearing so you can see what data was used to help determine the new assessment originally. If you are unsuccessful at the assessor level, you can choose to appeal to the Property Tax Assessment Appeals Board, and then even to the Maryland Tax Court. You can also choose to have an attorney represent you at any stage of the appeals process, though most people choose to try the assessor on their own. And we definitely recommend an attorney if you choose to go the Maryland Tax Court.
We don’t have any statistics on how many appeals are successful, but enough people are that it can really be worthwhile for you to consider.
If you decide you’re interested in appealing your assessment, feel free to schedule some time to discuss your options. We’ll be happy to help you find the right comps and prepare your case.