Real Estate, Property Taxes in MoCo County, Maryland

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Montgomery County Tax Increases/Questions + New Contract Disclosures Presented by

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Power Point presentation created by Federal Title Vice President Joe Gentile.

Transcript of Real Estate, Property Taxes in MoCo County, Maryland

Page 1: Real Estate, Property Taxes in MoCo County, Maryland

Montgomery County Tax Increases/Questions + New Contract Disclosures

Presented by

Page 2: Real Estate, Property Taxes in MoCo County, Maryland

Federal Title & Escrow Company FederalTitle.com :: 202-362-1500

Supplemental Tax Bills If you are handling the purchase of a new construction home or a home

that has undergone significant renovations, a supplemental tax bill is likely to be issued.

Typically, the developer has been paying a tax bill on the land only. State Department of Assessments and Taxation (SDAT) has access to

building permits. Assessors are then responsible for going into the field and periodically

checking the progress for the permits in his or her assigned area. SDAT adds the new construction value to the assessment roll when the

construction is deemed to be substantially complete. Supplemental bills are based on when the State assesses the dwelling:

3/4 year bill: covers the period October 1st – June 30th 1/2 year bill: covers the period January 1st – June 30th 1/4 year bill: covers the period April 1st – June 30th

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Supplemental Tax Bills A notice from the State Department of Assessments and Taxation

(SDAT) normally precedes the supplemental tax bill. Receipt of a quarterly assessment notice may also be an indication that

a supplemental bill is imminent. The additional value assessed on the assessment notice by SDAT may

be appealed to the Supervisor of Assessments within 45 days of the date of the assessment valuation notice.

The county issues the supplemental tax bill based on the SDAT valuation and while the assessment valuation can be appealed, the tax bill itself can not be appealed.

The supplemental tax bills are mailed only to the homeowner (the bills are not sent to the lender) and are due within 30 days.

Paragraph 23 on Page 7 of the Regional Sales Contract addresses supplemental tax bills, but is ambiguous.

When writing a contract for new construction or a renovated property, it is recommended that the issue of supplemental tax bills be addressed in a separate addendum.

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Supplemental Tax Bills

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New Property Tax Disclosures On December 4, 2007, the Montgomery County Council unanimously approved a bill that will require

sellers to provide a potential homebuyer with an estimate of what their actual tax bill will be in the first full year after they purchase a home.

The bill will take effect on April 1, 2008. The new REA disclosure attempts to address this by requiring a copy of the property tax bill to be attached

to the sales contract. The bill requires that any written or electronic material advertising the home information include what a new

owner would owe in estimated property taxes for the first full tax year after they purchase the home based on what is available at the time the advertising material is produced.

The property tax estimate is based on: next year’s phase-in value, if known, otherwise the current year’s phase-in value this year’s property tax rates (State, County, and municipal) the assumption of no property tax credits

The county has provided a Web-based Excel worksheet to determine the estimated taxes at: http://www.montgomerycountymd.gov/content/finance/CountyTaxes/InfoTaxes/Property_tax_calculation_bill_24_07.xls

To complete the worksheet, you need to get a copy of the property tax bill from http://www.montgomerycountymd.gov/finance and the SDAT record from http://www.dat.state.md.us/ .

The estimate must be updated: Every July 1, because the tax rates and phase-in values will change; AND In early January, if you used the phase-in value from the current fiscal year instead of the phase-in value for

the next fiscal year (the fiscal year in Maryland is from July 1st to June 30th.)

Currently, the County law does not apply to the municipalities of Barnesville, Kensington, Poolesville or Rockville.

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New Property Tax Disclosures

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Federal Title & Escrow Company FederalTitle.com :: 202-362-1500

New Property Tax Disclosures

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Federal Title & Escrow Company FederalTitle.com :: 202-362-1500

New Property Tax Disclosures

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Federal Title & Escrow Company FederalTitle.com :: 202-362-1500

New Property Tax Disclosures

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Federal Title & Escrow Company FederalTitle.com :: 202-362-1500

New Property Tax Disclosures

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Federal Title & Escrow Company FederalTitle.com :: 202-362-1500

New Property Tax Disclosures

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New Property Tax Disclosures

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Recordation Tax Increase in Montgomery County Currently, the Recordation tax rate is $3.45

per $500 (or fraction thereof). Effective March 1, 2008, if the consideration

payable exceeds $500,000, an additional $1.55 per $500 (or fraction thereof) will be added to the tax for the amount of consideration over $500,000.

For principal residences, the first $50,000 of consideration is still exempt from the Recordation tax.

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Recordation Tax Increase in Montgomery County Example: If the purchase price for a principal

residence is $750,000. The Recordation tax will be calculated as follows:

$50,000 exempt for principal residence $450,000 at $3.45 per $500 = $3105 $250,000 at $5.00 per $500 = $2500 Total Recordation tax = $5605

(NOTE: this is the total Recordation tax, which is typically then split 50/50 between the buyers and sellers).

The County Transfer Tax remains unchanged at 1.0% of the purchase price and the State Transfer Tax remains unchanged at 0.5% of the purchase price.

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REAL Credit Program

Would you let your friend walk away from $900? We didn't think so. If you haven’t signed up for the REAL Credit Program, you are allowing your home buyers to pay hundreds of extra dollars at closing.

Years ago Federal Title made a bold move by eschewing all Affiliated Business Arrangements (ABAs). We decided the money made from those arrangements should go to the home buyer, not the executives of large real estate firms.

Federal Title & Escrow Company, through its REAL Credit™ program, has saved home buyers nearly $1.5 MILLION dollars in closing costs.

Page 16: Real Estate, Property Taxes in MoCo County, Maryland

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REAL Credit Program

How does it work? Just sign up online and the next time you order closing services for your client, you will save them up to $900. We send an email to your client telling them you saved them $X dollars.

Plus you can track all the orders you place.

For more information, visit: http://federaltitle.com/oneroof_r.aspx

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Seller’s Net Proceeds Calculator

For your next listing, don’t forget to utilize our Seller’s Net Proceeds Calculator.

You input the seller’s pay-off information, credits to buyer, commission etc. and in seconds we give you an estimate for your seller.