Category: Property Finance

A Beginners Guide

What is a Property Tax?

Set by the Maryland Department of Assessments and Taxation (SDAT), property taxes are money paid by property owners to fund public services. These funds are used to improve the community including road maintenance, public schools, parks and recreation.

The value of your property is based on two main factors:

1. Assessed Value
   1. An assessor estimates your property’s value based on factors such as
      • Sales of similar houses in the market
      • Size and square footage
      • Improvements on the home
      • Location
      • Local market conditions
   2. In the State of Maryland, the assessments are reevaluated every three years.
2. Applying the Tax Rate (also called the Mill Rate)
   1. Tax rates, also referred to as Mill Rates in Maryland are established by each county and can differ.

Property tax = Assessed Property Value x Local Tax Rate.

Example: $350,000  x  1.5%  =  $5,250 per year

How are Property Taxes Paid? How Often?

Homeowners pay property taxes once or twice a year. Those with mortgages usually pay property taxes with their monthly mortgage payments. Your lender collects this money and pays it to the county each year.  If property taxes increase, mortgage payments may also increase.

How to Estimate Property Taxes before Buying?

Before purchasing a home, estimate property taxes by: 

• Reviewing the current tax bill of the property
• Checking the local mill/tax rate
• Knowing how often reassessments occur
• Understanding exemption eligibilities

Ways to lower your Property Taxes

You may be able to reduce your property tax bill by:

• Applying for exemptions
• Appealing property assessment
• Verifying property records for errors
• Looking into relief programs

Applying for Tax Exemptions

Maryland provides several property tax credits and exemptions for qualified individuals, such as low-income families and seniors.

• Homeowner’s Property Tax Credit Program (Homeowners’ Property Tax Credit Program)
• Homestead Tax Credit Program (Maryland Homestead Property Tax Credit Program)
• Other Exemptions: Exemptions are offered for senior citizens, disabled individuals, veterans, surviving spouse, agricultural properties and more.

What happens if Property Taxes are not Paid?

If property taxes are not paid on time, you may incur late fees or penalties, or

• A tax lien may be placed on the home which will prevent you from selling or refinancing until the debt is paid.
• In extreme cases, the government may foreclose on the property.