Legislature lays land mine for homeowners

A whopping 1.4 million home owners are in jeopardy. If just 10 percent of them fall into this state-mandated trap, it could cost them $170 million.

On the other side, county officials could reap a windfall at the expense of naïve and unsuspecting home owners.

Here’s the rub: Under a law passed unanimously by the General Assembly last year, every home owner has to apply to receive an annual Homestead Tax Credit — the property tax cap that limits how fast your property taxes can rise in a given year.

In Montgomery County, for instance, the tax cap is 10 percent. In Baltimore County and Baltimore city, the cap is 4 percent. In Prince George’s County, it is 3 percent and in Anne Arundel County, the property tax cap is 2 percent.

Even if your home has been reassessed at double its previous value, these tax caps put a lid on what you actually pay in higher property taxes.

Until this year, the caps automatically had been applied to your tax bills. Now you have to ask for this tax break from the state.

Many home owners don’t even know property tax caps exist. They ignore notices stuffed into their reassessment notices that arrive once every three years. Chances are tens of thousands of home owners will fail to apply for inclusion in the Homestead Tax Credit.

Only when their tax bills soar will they discover they’ve been caught in a massive snare created by state lawmakers. Then the howls of enraged protests will be heard. It could get ugly.

State bureaucrats convinced the legislature to change this law to help weed out property owners who are using these premises as second homes or as rental housing. They shouldn’t be getting this tax break, the bureaucrats claim.

Just why someone who happens to live part-time in Maryland or owns a vacation home in Ocean City or Deep Creek Lake should be discriminated against and forced to pay much higher property taxes hasn’t been made clear. Nor is there a strong case for squeezing more tax revenue out of owners of rental property (who will simply raise the rents they charge).

Only the counties are winners in this scam.

Meanwhile, unsuspecting home owners could be victimized by state government. Moderate-income home owners, minority home owners and elderly home owners are most susceptible. Renters will be forced to pay more, too.

No wonder a movement has started in the legislature to repeal this ill-conceived law. No one thought through the consequences of implementing this statute. Not one lawmaker stood up to oppose it. Everyone in the legislature goofed.

Bureaucrats claim that owners of vacation homes and rental properties are ‘‘tax cheats.” Since when? Why are these Marylanders considered outlaws? When did it become evil to buy a second home or become a landlord? Why this double standard?

The insidious part of this law is that it requires 1.4 million home owners to request a tax credit that used to be automatic. Human nature being what it is, a large portion of home owners won’t bother to apply for one reason or another.

Inadvertently, they will lose their property tax break. They will be furious when they discover what Annapolis has done to them.

Last year, Gov. Martin O’Malley and the Board of Public Works lowered the state property tax rate. Did they force home owners to apply to receive this reduced rate? No, it was automatic.

Is George W. Bush going to require everyone to apply for a federal tax rebate this spring? No, the checks automatically will be mailed to every tax filer. Nor is Bush going to jack up the tax rate on anyone who fails to requests a rebate.

Maryland’s perverse law might set a new standard for squeezing more money out of trusting taxpayers. We could, in the future, make everyone apply for all sorts of tax benefits. Those who don’t comply could then face huge penalties in the form of higher tax rates. Think how much money this could generate!

Of course, that’s unlikely to happen. If legislators haven’t lost their senses, this punitive law will be excised from the books in the next month. Failure to do so could have dire consequences for large numbers of home owners — and create political peril for 188 legislators.

Barry Rascovar is a longtime State House columnist and a communications consultant in the Baltimore area. He can be reached at brascovar@ hotmail.com.