Homestead Property Tax Credit
The Homestead Property Tax Credit is administered by the Maryland Department of Assessments and Taxation (SDAT). The credit helps homeowners by limiting the annual increase in the taxable assessment of their principal residence, reducing the impact of rapidly increasing property values.
The credit does not limit your property's market value. Instead, it limits the amount of the assessment increase that is subject to property taxes.
How the Credit Works
Each county and municipality in Maryland establishes a Homestead Credit cap of 10% or less.
If your property's assessed value increases by more than the applicable cap from one year to the next, the increase above the cap is not taxed. Instead, a tax credit is applied to the portion of the assessment that exceeds the allowable increase.
Example
- Previous taxable assessment: $100,000
- New assessment: $120,000
- Maximum taxable assessment with a 10% cap: $110,000
The Homestead Credit applies to the $10,000 increase above the allowable assessment limit, reducing the property taxes owed on that amount.
Eligibility Requirements
To qualify for the Homestead Property Tax Credit, you must:
- Own the property.
- Use the property as your principal residence.
- Occupy the property for at least six months of the year, including July 1, unless temporarily absent due to illness or the need for special care.
- Receive the credit on only one property, which must be your principal residence.
The following conditions must also be met during the previous tax year:
- The property was not transferred to a new owner.
- There was no homeowner-requested zoning change that increased the property's value.
- There was no substantial change in the use of the property.
- The previous assessment was not determined to be clearly erroneous.
One-Time Application Requirement
Maryland law requires homeowners to submit a one-time Homestead Application to establish eligibility for the credit.
Once approved, you generally do not need to reapply unless requested by SDAT or your eligibility changes.
Homes Under Construction or Major Renovation
Property owners who temporarily vacate their principal residence to:
- Demolish and rebuild their home, or
- Complete substantial improvements,
may remain eligible for the Homestead Credit if:
- They owned and occupied the property as their principal residence for at least three consecutive tax years before construction began; and
- The replacement home or improvements are completed by the end of the next succeeding tax year.
How to Apply
Applications must be submitted directly to the Maryland Department of Assessments and Taxation (SDAT).
The Homestead Application is generally completed one time after purchasing and occupying your home as your principal residence.
If Your Application Is Denied
If SDAT denies your Homestead Credit application, you may contact the Homestead Tax Credit Unit to discuss your eligibility.
A final denial may be appealed to the Property Tax Assessment Appeal Board within 30 days of the denial.
Questions?
For questions about the Homestead Property Tax Credit, contact:
Maryland Department of Assessments and Taxation (SDAT)
Email: sdat.homestead@maryland.gov
Website: https://dat.maryland.gov/Pages/Tax-Credit-Programs.aspx
Baltimore Area: 410-767-2165
Toll Free: 1-866-650-8783
Important Information
- Do not email applications containing personal information such as Social Security numbers or tax returns.
- Mail or fax completed applications and supporting documentation to SDAT to protect your personal information.
- Homebuyers purchasing a principal residence receive information about the Homestead Credit at settlement as required by Maryland law.
Authority
- Maryland Tax-Property Article
- Chapter 333, Laws of Maryland (2021)
File online at: Maryland OneStop