The following letter was sent by John P. Mallamo of Bel Air:
HB 653 Real Property Tax Relief
On 25 February the Maryland General Assembly House Ways and Means Committee conducted the first reading and public hearing on HB653, Constitutional Amendment.
This Bill introduced by Del Richard Impallaria, (R-7) provides Real Property Tax Relief to all property owners and residents of Maryland. Important features of the Bill include:
1. A fixed cap on property assessments. Real Property Tax Assessments are limited to the lower of the Consumer Price Index or 2% per assessment period, unless and until a property is purchased or transferred.
2. Protection to property owners affected by government action. Property owners will not receive full cash value appraisals and increased assessments from the base value of their properties purchased as replacements for properties affected by actions resulting from eminent domain, government purchase, governmental activity resulting in inverse condemnation. What this really means is that if a property owner loses property to a government actions, the property owner can purchase a like property without receiving a levy of a full cash value assessment that would be otherwise associated with a transfer of property.
3. Protects property transfers between spouses from full cash value appraisal. Transfer between spouses includes transfer to a trustee for the beneficial use of a spouse; transfer upon death; or transfer to a spouse or former spouse resulting from agreement or decree of dissolution of marriage or legal separation.
4. Protects property transfers from full cash value appraisal if the property is a principal residence and the transfer is between family members.
What does all of this mean to property owners.
First it means that the assessed value of a property is set at a base year. The assessed base value cannot be increased by assessment above the Consumer Price Index or 2 percent in any period. The only time the full cash value can be recomputed is on purchase or change of ownership. This applies not only to primary residences but to business properties and second or other homes as well. By contrast the present assessment process establishes a new value for properties based on area sales, and construction costs. Property assessments under this system have risen by as much as 60% in one assessment period.
Second transactions by property owners whose property is affected by government actions, and who subsequently purchase similar replacement properties are not considered as purchases or transfers. The base value of the affected property is transferred to the replacement property.
Third, property transfers between family members, spouses, former spouses and surviving spouses, under conditions described above are not considered purchases or transfers , and the base value is not increased by a new appraisal.
Residential property owners benefit because property assessment increases are limited to the lower of the Consumer Price Index or 2 per cent.
Business property owners receive the same protection from increasing assessments.
Residents who do not own property, but who deal with business in Maryland that do, will see the decrease in the cost of doing business reflected in the price of goods they purchase.
Local and state government benefit because they have a predictable source of revenue.
If you agree that this Bill will provide Real Property Tax Relief, then send a note asking members of the Maryland State Legislature House of Delegates Ways and Means Committee to vote in favor of the Bill. Their names and E-mail addresses are listed below.
John P. Mallamo
Bel Air, MD