Tax Rate and Credits

CLEAN WATER ACT FEE REDUCTION

The county’s Clean Water Act Fee is added to your tax bill each year. It provides a dedicated revenue source for addressing stormwater runoff and improving water quality. The charge is based on a property’s assessed impervious surface coverage providing a mechanism to equitably allocate the fee based on a property’s stormwater contribution. Thus, each property contributes a fair and equitable share toward the overall cost of improving water quality and mitigating the impact of stormwater runoff. Rebates are available to help with tree planting and installation of rain barrels, rain gardens, etc.

The annual fee may be reduced if you have installed rain barrels, rain gardens, or permeable pavement. The application form for a reduction request is available on the web at:  http://www.princegeorgescountymd.gov/sites/StormwaterManagement/Resources/AppForms/Pages/default.aspx

CITY PROPERTY TAX RATE

The city property tax rate for FY2014 is .86 per $100 of assessed value of your real estate property in comparison to the county tax rate of .96 per $100 of assessed value of your real estate property. Each municipality has its own “differential” which lowers the county tax rate for municipal residents based on the services the municipality provides. In other words, the county gives you a credit on your county taxes because you are already paying the municipal tax to cover some of the services that the county then does not have to provide (police, public works, code enforcement). You can see all the tax rates listed at State Dept. of Assessments and Taxation.

TAX CREDITS FOR MOUNT RAINIER
Below you will find information on historic tax credits, homeowner’s tax credit, homestead tax credit, and federal credits to help with energy efficiency.

HISTORIC RENOVATION TAX CREDITS

Maryland offers a tax credit for rehabilitation of historic structures. 

The Maryland Heritage Structure Rehabilitation Tax Credit Program is administered by the Maryland Historical Trust and provides Maryland income tax credits equal to 20% of the qualified capital costs expended in the rehabilitation of a “certified heritage structure.”  The credit is available for owner-occupied residential property (homeowner) and income-producing property (commercial).

You MUST get prior approval from the HMT before beginning work.  The lag time in approval of applications can be several weeks or more.  Several homeowners in the City of Mount Rainier have successfully gone through the process and received the tax credits. To be eligible, you must spend a minimum of $5,000 on the project.

Tax credits are one time reductions of the amount of taxes you owe to the State of Maryland. For rehabilitation projects, you can receive a tax credit equal to 20% of the qualified work you undertake on your historic home, provided that the building has both been certified as historic AND the work has been approved by the Maryland Historical Trust prior to starting. Nearly all the older homes (built prior to 1945) in the City of Mount Rainier are certified as historic. Each home in the city has been graded as to its historic value.  If your home is a “contributing” resource to the historic district, then it will qualify.  Contact City Hall for help in determining how your home is graded.

For example – you decide to replace the roof. Prior to starting construction you get approval from MHT and MHT certifies that the work is consistent with the Secretary of the Interior’s Standards for Rehabilitation. The total cost of the roof replacement ends up being $10,000, and you send MHT all of the receipts and photographs necessary to verify the expenses and that the work is consistent with the initial approval. If everything checks out, you may now deduct $2,000 (20%) from the amount of Maryland state income taxes that you owe for the year that you completed the project. If you owe less than $2,000 in income taxes that year, you will receive a refund check from the Comptroller of Maryland.

CITY TAX CREDIT FOR HISTORIC REHABILITATION

The City of Mount Rainier now offers a property tax credit for homeowners who restore their homes.

In order to qualify for the city tax credit, you must first be approved for the state’s Heritage Structure Rehabilitation Tax Credit Program, administered by the Maryland Historical Trust. The state provides a tax credit of 20 percent of the certified project costs. The signed certification form will provide the approved final project costs that can be used to calculate the city tax credit (10 percent of the total state-approved costs). To be eligible for the City tax credit, the signed state certification form must be provided to the City Manager within 90 days of the date on the state form. Information on the state program can be found at: http://mht.maryland.gov/

The city reduces the city property tax you owe for up to five years by drawing down on the total city credit you received. For instance, if you have a total state certified project amount of $100,000, you will get a state credit of $20,000.  Plus, you will get a city tax credit of $10,000.  The city will use your $10,000 credit to pay your city property tax bill for up to five years.  If you owed $2,000 each year in city property taxes, you will not pay any city property tax for five years.

Also see  CHAPTER II Assessments and Taxation of the City Code.

CITY TAX CREDIT FOR WINDOWS AND DOORS

Homeowners who replace existing windows or exterior doors, or install new windows or exterior doors are eligible for a city tax credit if the windows/exterior doors are deemed historically and/or architecturally compatible with the style and period of a house that has historical or architectural value. The tax credit will be 10 percent of the cost of the windows/doors. The project requires prior approval from the City Manager. Generally, the City Manager will have the property owner meet with the city’s Design Review Board. Once a project with prior approval has been completed, the applicant will submit “properly documented expenses” (materials and labor) to the City Manager for the final approval of the project. The City Manager may inspect the completed project or ask the Design Review Board to inspect the completed project. Note: for this city tax credit, you do not need to participate in the state tax credit program.

The homeowner is not eligible for the city preservation tax credit for windows/exterior doors, if the homeowner has already included the windows/doors in a project approved by the Maryland Historical Trust and the homeowner will receive or has received a city preservation tax credit for the MHT approved project.

Windows and exterior doors are defined to include storm windows and storm doors. The tax credit is available for installation or repair of storm windows and doors that have been approved using the same criteria as for windows and exterior doors.

What is a structure with architectural value? This includes: (i) a structure with architectural value, but that does not meet the age requirements of the Mount Rainier National Register Historic District; (ii) a structure that has been so altered as to fail the test as a contributing resource to the Mount Rainier National Register Historic District, but which through sensitive restoration might recapture the architectural value previously lost; and (iii) a structure outside of the Mount Rainier National Register Historic District boundaries, but within the City limits that has architectural value. Structures with architectural value would include those that are representative of a recognized style and retain a significant amount of exterior features to remain representative of that style.

Remember– Failure to obtain approval from the City Manager prior to purchase of the windows or doors (as determined by the date on the sales receipt) will make the project ineligible for the city tax credit.

Also see  CHAPTER II Assessments and Taxation of the City Code.

Forms
Window and Door Tax Credit Application
Guidelines – Windows Doors Final
Handout – Windows Doors Final
Completed Window Door Reimbursement Form

HOMESTEAD TAX CREDIT (state tax credit)

Another tax relief program is the Homestead Tax Credit. First enacted in 1977, the program has been amended so that homeowners may be eligible for a State tax credit if the assessment of their owner-occupied principal residence increased more than 10% over the prior year. State law requires that county and municipal governments set a Homestead Credit Percentage between 0% and 10% for purposes of local property taxation. Beginning in 2008, homeowners are required to submit a one-time tax credit application that is included in that year’s Assessment Notice sent to one-third of the property owners.

HOMEOWNERS TAX CREDIT (state and city tax credit)

Concerned about increased property taxes? The State of Maryland has a program that sets a limit on the amount of property taxes any homeowner must pay based upon his or her income. This program is available to all homeowners regardless of their age. To be eligible, your combined gross household income cannot exceed $60,000. Your net worth, not including the value of your real property nor any qualified retirement savings or IRAs, must be less than $200,000. For purposes of the tax credit program, “income” means the combined gross income before any deductions are taken. Income from all sources must be reported whether or not the monies received are included as income for Federal and State income tax purposes. Nontaxable retirement benefits such as Social Security and Railroad Retirement must be reported as income for the tax credit program. The tax credit is based upon the amount by which the property taxes exceed a percentage of your income according to the following formula: 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. Example: If your combined household income is $16,000, your tax limit is $420. You would be entitled to receive a credit for any taxes above the $420. If your actual property tax bill was $990, you would receive a tax credit in the amount of $570 — this being the difference between the actual tax bill and the tax limit. Applications are available at most public libraries, or by calling the Tax Credits Telephone Service at 1-800-944-7403 or visit the website: www.dat.state.md.us/sdatweb/htc.html.

Plus, the City of Mount Rainier provides an automatic supplement to the Homeowners Tax Credit.
The amount of the homeowners’ property tax credit local supplement is equal to 10% of the eligible homeowners state homeowners property tax credit. If you receive the state tax credit, the city will check your eligibility and send you a check for the amount of the city credit. Remember, in order to get the city homeowners tax credit, you MUST be enrolled in the state program first.