Senior Subcabinet:

Montgomery County Property

Tax Credit Programs for Seniors
Prepared by: Department of Finance
www.montgomerycountymd.gov/finance
March 2, 2016

State Homeowners Property Tax Credit (HOTC)

Provides credits against the homeowner's property tax bill if the

property taxes exceed a fixed % of the applicants gross income.

REQUIREMENTS

Combined gross household income cannot exceed $60,000 for the

homeowner and spouse and all other non dependent occupants

Social Security and Railroad Retirement Act Benefits must be reported

as income for the tax credit program.

Principal residence where you live at least 6 months of the year

Net worth less than $200,000, not including the house or any qualified
retirement savings or Individual Retirement Accounts.

CALCULATION

Tax credit= amount by which the property taxes exceed a percentage

of your income:

0% of the first $8,000 of the combined household income;

4% of the next $4,000 of income;
6.5% of the next $4,000 of income; and
9% of all income above $16,000.

In FY16 the State HOTC program issued $4,777,163 to 3,723 recipients

In FY15 the State HOTC program issued $4,877,201 to 3,823 recipients

6,232 County residents applied and approximately 60% or 3,723 were

approved for the credit

Average: credit was $1,283; income of $24,116; assessment of

$270,536

MARYLAND STATE HOMEOWNERS TAX CREDIT PROGRAM

MONTGOMERY COUNTY RESIDENTS
FISCAL YEAR 2016

INCOME

TOTAL

SHARE

NUMBER
OF

TAX CREDIT

OF TOTAL

RECIPIENTS

AMOUNT

AMOUNT

Less than $5,000

22

$46,804

1.00%

$5,000 - $10,000

256

$568,843

11.90%

$10,000 - $15,000

485

$953,709

20.00%

$15,000 - $20,000

611

$1,057,342

22.10%

$20,000 - $25,000

659

$905,821

19.00%

$25,000 - $30,000

584

$632,456

13.20%

1,106

$612,188

12.80%

3,723

$4,777,163

100.00%

More than $30,000

TOTAL

Source: Maryland State Department of Assessments and Taxation (Feb. 2016)

Supplemental Homeowners Property Tax Credit

The program provides tax credits for homeowners who qualify on the basis
of their household income as compared to their property tax bill.

The State Homeowners Property Tax Credit (HOTC) program and its
Montgomery County supplement are administered by SDAT

Granted to eligible homeowners of all ages. Even though the State HOTC is
applied against all real property taxes (State, County, and Municipal), the
County supplemental credit is applied only against the General County and
Special Service Area real property tax.

Montgomery County Supplement

Fiscal Year

Number of Recipients

Average
Total Supplement

Supplement

FY16

4,810

$4,757,440

$989.07

FY15

4,899

$4,040,480

$824.76

FY14

4,957

$4,153,010

$837.81

FY13

5,178

$4,259,728

$822.66

Taxpayers must apply for the State HOTC to be considered for the
supplemental tax credit.

Generally, applications must be made by September 1st to be applicable for

that tax year, although taxpayers who are at least 70 years of age may submit
retroactive applications for the current and 3 prior levy years at any time.

FY12

5,199

$4,148,948

$798.03

FY11

5,115

$3,887,300

$759.98

Effective levy year 2005, Montgomery County enhanced the program by (1)
doubling the maximum property assessment amount used for computing the
tax to $300,000, and (2) changing the income formula to allow for eligibility
at a higher income level.

FY10

2,980

$2,279,429

$764.91

FY09

4,805

$3,631,810

$755.84

FY08

4,822

$3,362,398

$697.30

Due to changes in the State HOTC credit program in levy year 2006, qualified
retirement savings are now excluded from the maximum $200,000 net worth
requirement (this net worth requirement already excluded the value of the
principal property).

FY07

4,704

$3,223,950

$685.36

FY06

5,121

$4,541,553

$886.85

FY05

2,884

$557,228

$193.21

Senior Property Tax Credit

At least 65
Principal Residence
50 percent of the combined State
Homeowners Tax Credit and County
Supplement. Shown as one combined amount
on the taxpayers property tax bill.
Senior credit may be based on (1) the State
credit (if the County Supplement is zero), (2)
the County Supplement (if the State credit is
zero), or (3) both the State credit and County
Supplement.
Although this credit does not require a
separate application, taxpayers must apply for
the State HOTC to be considered for the
senior tax credit.
Since the HOTC application requests
information on the age of the applicant, SDAT
can make the determination of eligibility for
the Senior credit.

Levy Year

Amt ($)

Recipients

2014

523,007

2,901

2013

540,517

2,951

2012

548,733

3,063

2011

534,462

3,075

2010

500,757

3,025

2009

293,633

1,763

2008

467,845

2,842

2007

433,133

2,852

Note: Since SDAT does not provide the certified amount of Senior Credit but includes it with the
Supplemental Homeowners Tax Credit (see previous page), the amounts shown are estimated as
25% of the combined Supplement + Senior Credit for the estimated number of eligible recipients.

Income Tax Offset Credit (ITOC)

The County may grant, by law, a credit against the county
real property tax in order to offset, in whole or in part,
increases in the county income tax revenues resulting
from a county income tax rate in excess of 2.6%.
Available only to the owner of an owner occupied
residential property (i.e., principal residence), as
determined by SDAT.
The County establishes the amount of a property tax
credit under this section by Resolution for the next levy
year.
This credit described as County Property Tax Credit on
the property tax bill - is applied against the General
County and Special Service Area real property taxes.
The HOTC, Supplement, Sr, Property Tax Credit, and the
ITOC will not reduce the Water Quality Protection Charge,
Solid Waste fees, Municipal Fees or Taxes, or a WSSC
Front Foot Benefit Assessment.

Levy Year

Credit Amount

Amt ($)

Recipients

2014 $

692

$ 168,787,213

243,913

2013 $

692

$ 168,674,325

245,369

2012 $

692

$ 168,379,383

245,022

2011 $

692

$ 169,025,541

250,333

2010 $

692

$ 168,686,072

243,766

2009 $

692

$ 168,168,180

243,722

2008 $

690

$ 142,295,619

245,761

2007 $

579

$ 150,295,953

245,181

Homestead Credit

To assist homeowners with the fiscal impact from large assessment

increases, the Homestead Property Tax Credit program limits the
annual taxable assessment increase to a rate set annually by county
resolution between 0% and 10%.

Recipients

962,007

2,334

2013

894,907

3,271

2012

2,463,384

7,467

The State of Maryland, Montgomery County, and municipalities in

Montgomery County use a 10% homestead credit which results in any
annual assessment growth in excess of 10% to become a credit.

2011

6,904,893

23,768

For example, if the annual phase-in of assessment growth is 25%, the

homestead credit will reflect 15% while the remaining 10% is reflected
in taxable assessment growth that year.

2010

46,094,294

89,414

2009

134,723,816

176,108

2008

213,955,975

224,125

The Homestead credit is applied against the General County and

Special Service Area real property taxes.

This program is administered by SDAT and applies only to owneroccupied residential dwellings who have applied for the credit.

This credit is not applicable in the first year following the purchase of a
new home.

Credit Amount

2014

Levy Year

In addition to limiting annual growth in taxable assessments for

homeowners, the homestead credit spreads out the assessment
growth over a longer period of time resulting in a more stable revenue
flow.

Since the cumulative credit can be significant, some taxpayers may still
observe growth in their taxable assessment during times of weak real
estate market conditions as prior year growth is still being phased in.

Town of Kensington which elected to set the rate at 5% effective LY

2006

State Renters Property Tax Relief

At least 60 years old or

Permanently and totally disabled and has qualified for federal benefits or has been certified by the County Health Officer as totally disabled; or

A surviving spouse of one who would otherwise have been eligible; or

Under 60 years and:

Has gross income below the poverty threshold that is established by the U.S. Department of Commerce, Bureau of the Census in August of the previous calendar year;
Has one or more dependent children under 18 years old living with the renter; and
Does not receive federal or State housing subsidies or reside in public housing.

Gross income is under the limit set each year ($16,317 in income for a 2 person household in 2015). amount varies by household size.
all applicants must:

Have net worth of $200,000 or below

Apply on or before September 1

The property tax relief is the assumed property tax on real property less a percentage of the combined income of the renter.

Assumed real property tax is 15% of the occupancy rent paid by a renter during the calendar year

0% of the 1st $4,000 of combined income;

2.5% of the 2nd $4,000 of combined income;

5.5% of the 3rd $4,000 of combined income;

7.5% of the 4th $4,000 of combined income; and

9% of the combined income over $16,000.

The property tax relief under this section may not be:

(1) more than $750;

(2) granted to any renter whose combined net worth exceeds $200,000 as of December 31 of the calendar year for which the property tax relief is sought;

(3) granted to any renter whose dwelling is exempt from property tax

Renters Property Tax Relief: County Supplement

County Supplement will be effective for Levy Year 2016 (7/1/16)
50% of the State Renters Property Tax Credit
No additional application required

Property Tax Deferral

A taxpayer may defer payment of County property taxes due on residential real property
used as the owners principal residence.

The amount of taxes that may be deferred for any one year is:

the amount that County taxes exceed the amount of County taxes in the prior taxable year.

Taxes that are eligible for deferral are the General County and Special Service Area real property
taxes, if:

The gross income or combined gross income of all individuals who actually reside in the dwelling did not
exceed $120,000 for the preceding calendar year; and
The owner, or at least one of the owners, must reside in the dwelling as their principal place of residence, and
must have done so for at least 5 years.

Interest accrues on the deferred taxes at a rate set annually by the County that does not exceed
the prime lending rate (~3%).
The annual interest rate set by the County applies to any tax deferred that year, regardless of the
year when the tax was first deferred (i.e., the new interest rate is applied to all deferred taxes).
The accumulation of deferred taxes and accrued interest must not exceed 50% of the full cash
value of the property.

www.montgomerycountymd.gov/finance

http://dat.maryland.gov/Pages/Tax-Credit-Programs.aspx

Resources

Tax Expenditure Report:

http://www.montgomerycountymd.gov/Finance/Resources/Files/Tax
%20Expenditure%20Report%20FY15.pdf
State Department of Assessments and Taxation
http://dat.maryland.gov/Pages/default.aspx
Homeowners Prop Tax Credit:
http://dat.maryland.gov/realproperty/Pages/Homeowners%27Property-Tax-Credit-Program.aspx
View or Pay your property Tax Credit On line
https://www2.montgomerycountymd.gov/realpropertytax/default.asp
x