RISMEDIA, July 19, 2007—(MCT)—Want to save on your tax bill? Lori Decker, director of Frederick County’s Treasury Department, has some tips.
The treasury department sent out about 90,000 annual property tax bills this month for fiscal year 2008. The bills include state, county and municipal taxes, special taxing district fees and other charges. Frederick County expects to take in $206.6 million in tax revenue this year, and collect another $26 million for the state. The county also collects more than $41.6 million for the county’s 12 municipalities. While the rates and assessments are already set, credits and payment schedules exist that can save homeowners money if they take advantage of them.
Decker cautions homeowners first and foremost to make sure they are paying their property taxes.
Many homeowners opt to pay taxes through their mortgage companies. A company escrows, or sets aside, property taxes as part of the mortgage payment. Then, the company pays the property tax bill for the homeowner. But Decker tells homeowners to double-check the arrangement. Recently, many homeowners have refinanced their mortgages and, in the process, took on the responsibility of paying their own taxes without an escrow fund. Last year, Frederick County saw a huge increase in properties sold at tax sale because of delinquent payments. Much of the increase is due to refinancing, Decker said.
At the 2007 tax sale in May, 458 properties were sold. In previous years that number was about 300.
A number of property owners thought their mortgage companies were paying the taxes, and didn’t realize they would have to pay themselves until they got delinquent notices. Then they did not have the money, Decker said.
Many homeowners who opt for their mortgage company to pay the tax bill are missing out on an opportunity to get a discount on their taxes, Decker said.
Most companies automatically pay the tax bill in two segments, in July and December. But that means the homeowner ends up paying about 1% interest between October and December on the second payment. Decker said taxpayers can ask their mortgage company to switch the payment schedule to once a year in July. Then the homeowner will receive about a 1% discount on the total tax bill, and not pay any interest.
If you’re paying your own tax bill, the same principle applies. If you pay the entire bill in July, you get the 1% discount. If you pay in August, there’s about a half percent discount. After September, interest starts kicking in.
Paying what you can when you have it will reduce interest charges and prevent you from having a daunting amount to pay at the end of the year.
The state has a tax credit program based on income. Homeowners with a household income of less than $60,000 may be eligible for the credit.
The Homeowners’ Tax Credit is not automatically granted, and residents must apply every year by no later than Sept. 1 on a standard application supplied by the Department of Assessments and Taxation. Many homeowners receive another type of tax credit which is already calculated on the bill. The homestead tax credit helps homeowners deal with rising assessment rates by limiting increases to 10%. Those who are 65 and older or disabled with an annual household income of $55,000 or less may qualify for a tax deferral from the county as well. The deadline for the application for deferral is September 15.
Since tenants pay property taxes indirectly through rent, the state also offers an income-based property tax credit to renters. The credit is similar to the homeowner credit.
The application can be obtained from the same office as the homeowner credit, and the application deadline is also Sept. 1. The credit is based on rent in relationship to your income.
Copyright © 2007, The Frederick News-Post, Md.
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