Take
Advantage of “60-Day Rule” for Reducing Property Taxes
“What you don’t know won’t
hurt you,” goes the old proverb. But in
tough economic times the better practice is to arm yourself with information
that saves money. This applies to the
“appeal upon purchase” right granted to new property owners. Many
purchasers of residential and commercial property in Maryland don’t know they have
a special right to appeal their property assessment during the first 6 months
of the year. This article explains the
buyer’s right to appeal under the “60-day Rule.”
Each December, the State Department
of Assessments and Taxation (SDAT) issues a new assessment notice to one-third
of all non-exempt property owners in each county in Maryland.[1] This triennial reassessment notice sets forth
the local assessor’s opinion of the value of the property for taxation purposes
for the following three (3) years. The
owner has right to file an appeal of the assessment and seek a hearing with the
assessor. During the last ten years, the
percentage of property accounts appealed has been quite low, ranging between 4%
and 7% of all accounts state-wide. Recent
statistics from SDAT indicate that 5.4% of all property owners across Maryland
filed an appeal in fiscal year 2009; only 3.5% filed an appeal in fiscal year 2010;
and 4.4% filed an appeal in fiscal year 2011.[2] (The fiscal year extends from July 1st
to June 30th of the following year.)
In addition to the triennial method
of reassessing properties, the local assessment office also has the option of
reassessing property whenever ownership is transferred during the year. The
assessment office, with the exception of Baltimore City, receives a copy of all
deeds and property sales prices as the deed transferring the property is
recorded with the clerk of the court.
In Baltimore City, the Department of Public Works handles the data entry
and provides the information to the assessment office.
After reviewing the transfer data
and other market information, the assessor may decide to increase the
assessment, decrease it or leave it alone.
Whatever decision the assessor makes, the property purchaser can elect
to file an “out of cycle” appeal of the assessment. Purchasers of properties
that are transferred after January 1 and before July 1 have a special right to appeal
the assessment within sixty (60) days of the date of transfer.[3] For transfers completed after June 30, the
purchaser must wait until year-end for any appeal to be processed.
The Maryland Code defines the
transfer date as the date of delivery of the deed, which is “presumed to be the
date of the last acknowledgement, if any, or the date stated on the deed,
whichever is later.”[4] The transfer date will typically be the date
of settlement when the deed and other relevant documents are signed, as opposed
to the date of the contract or the date the deed is recorded. Under this statutory framework, a purchaser
who entered into a contract toward the end of the year, but did not go to
settlement until after January 1st, can still take advantage of the
rule. It also allows for appeals to be
filed after July 1st if the date of the delivery of the deed was
prior to July 1st. The new
owner must closely follow the 60-day calendar to benefit from the appeal right.
Although SDAT does not keep separate
statistics for appeals filed under the 60-day rule, it is believed that the
appeal numbers are very small due to the public’s lack of knowledge about the
rule. Other than a two-sentence
reference on SDAT’s website, this valuable right is not widely advertised.
The process for filing the appeal is
similar to the standard out-of-cycle appeal.
The owner must begin by requesting a hearing with the local assessment
office to review the assessment. Of
course, not every new purchase merits an appeal of the existing assessment. If the assessment is less than or equivalent
to the purchase price, it will be difficult to challenge the assessment unless
the purchaser can articulate some reason for paying more than the fair market
value.
[1] Exempt properties include government-owned properties,
cemeteries, certain properties used exclusively for charitable, educational or
religious purposes, and other specially designated properties. Md. Code Ann. Tax Prop. § 7-101 et seq.
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