A client of mine (he just sold his house last month) was wondering how long it would take for the Prince George's County government to refund his property taxes. Well, of course, the short answer is "Don't hold your breath!)

However, I went to the county website and there a new tab there for checking on and even paying your taxes. First of all, that's incredibly helpful. You can see when your taxes were paid (to check up on your mortgage company!) and see what the balance is.

So, when I looked up his taxes, I found that his property was not listed as his principal residence -- which has cost him a lot of money over the past seven years. He is eligible for the homestead tax credit, which I discussed here and here, but since it was listed as "not a principal residence", he did not receive the credit.

There's no happy ending to this story. My client cannot get a refund of the homestead tax credit that he should have received over the past seven years. That money is gone.

So, moral to the story ... check your tax records carefully and make sure that your principal residence is correctly identified as your principal residence. It can save you a great deal of money in just one year and a great deal more when it accumulates over many years.  Go to the Prince George's County Property Tax Records, type in your address and check.

(C) 2006 Susan Pruden.

A few days ago, I wrote about property taxes and assessments in Maryland and what they mean when the house being assessed has been the principal residence for several years. The Homestead Tax Credit insulates those owners from the huge increases in assessed value that we're seeing now.

But what happens if you bought your home after June 30? For you, the Homestead Tax Credit won't kick in until your second year of homeownership.

Let's break down the tax assessment. A) is the old total market value when it was assessed three years ago. B) is the new market value. In this example, the value increased over 150%. C) is the amount your taxes will be based on if you just purchased the home or if the property is not your primary residence. The three figures that make up D) are the amounts that the previous owner was paying taxes on due to the Homestead Tax Credit. The amounts vary depending the county, state or municipality.

I'm sure this is clear as mud. The good news is this: If you just bought your house, even though your taxes are likely to go up, after this year you'll have the benefit of the Homestead Tax Credit. They won't go up nearly as much after this year. The good news for investors? Your tax deductions just got bigger.

(c) 2006 Susan Pruden

If you're a homeowner, you probably received your new tax assessment sometime last month and, if you're like me, you freaked out a little at the new assessed value of your home. Mine increased 150% from the assessment 3 years ago.

After my heart stopped racing, I sat down to figure out what this means in terms of my monthly tax payment on my mortgage. What a pleasant surprise! Because this is my principal residence, I automatically qualify for the Homestead Tax Credit.

Here's a fairly simple explanation: We pay property taxes to the state and to the county, and for some of us, to a municipality. Currently, the state caps the increase in your tax bill to 10% in any one year. The good news is that Prince George's County caps the increase at 3% and taxes to the county are the lion's share of your annual tax bill. (For simplicity, we'll ignore the municipalities.)

So, I've been living in my house since 1991, when taxes (and house prices) were relatively low. With the Homestead Tax Credit, my payments are way below the amount that the current assessment would indicate. I may never pay a tax bill on the full assessed value of my home.

And that's just fine with me.

If you are a landlord or you bought your home after July 1, you aren't so lucky. In future entries, I'll talk about what the new tax assessments mean to you if you just bought a home or if you own rental properties.

(c) 2006 Susan Pruden