1.
QUESTION: Why did
you create this website and the property tax analysis spreadsheet?
ANSWER: Every year,
usually between January and June, many articles appear in the Washington Post,
the Gazette, and other news media about property taxes. The articles usually
say something like “assessments have gone up” and “such and such a politician
has proposed cutting the tax rate by x cents”. Such vague statements provide
little useful information to the average property owner.
The
spreadsheet presented here is intended to shine some light on the real effect
of assessment and tax rate changes.
Anyone can use the spreadsheet to quickly determine the exact tax effect
of an assessment change or a proposed tax rate change on their property, or on
any property that is of interest.
The
Montgomery County Council receives many letters from residents about property
taxes. (The letters are part of the public record, so anyone can read
them.) Most of the letters make vague
statements like “We just can’t afford another property tax increase,” and
probably have only moderate influence on decisions made by our elected officials. By using the spreadsheet and providing
specific dollar amounts in letters to the Council, taxpayers can show that they
know the exact effect of a proposed tax rate, adding more credibility to claims
of burdensome taxation.
2.
QUESTION: A credit
for owner-occupants, as was issued in 2005, would shift more of the tax burden
to landlords. The landlords would pass
the tax increase on to renters, causing a major increase in property rental
rates. As a renter, I’d rather see my landlord get a tax rate cut so that he’ll
pass the savings on to me
ANSWER: Your
landlord will increase your rent by about the same amount whether his taxes are
increased or not. In our market, rental
prices are set primarily by what people are willing to pay, not by the
underlying cost of owning and running a rental property. If your landlord’s
mortgage interest rate went down, resulting in a reduction in his mortgage
payments on the rental property, do you think that he would pass the savings on
to you? Like any business owner, a landlord will set his rent at whatever rate
brings him the greatest profit after taking all known factors into
account.
When
contemplating a rent increase, landlords always consider the risk of losing
good tenants and the cost to replace the tenant. Contrary to what some people
would have you believe, there is no shortage of rental properties in
3.
QUESTION: What is
the Special Area Property Tax and how does it affect my tax bill?
ANSWER: The
Special Area Property Tax is a collection of smaller taxes that subsidizes or
pays for specific services, such as fire and rescue, public transportation,
local parks, and recreational facilities. Your Special Area Property Tax rate
varies depending upon the property location. For properties located in a
municipality, the Special Area Property Tax rate is typically lower than in
areas outside of a municipality. For the
past four years, the Special Area Property Tax rate has increased each
year.
With the
large increase in assessment values over the past four years, many property
owners experienced large increases in their Special Area Property Tax.
The news
media give the Special Area Property Tax little attention, so the services that
are funded by this tax tend to quietly enjoy increases in funding each year
with little input from taxpayers.
Although there is little media discussion of the Special Area Property
Tax, there is nothing small about the actual amount of the tax. For a homeowner
living outside of a municipality (tax class R042), the Special Area Property
Tax is equal to about 40% of their county property tax.
More
information about the Special Area Property Tax can be found in the Montgomery
County Dept. of Finance FAQ.
For the
period 2001 to 2005, the Special Area Property Tax rates outside municipalities
and other districts (in other words, in most of the county) are shown below. It
is particularly worth noting that the Special Area Property Tax rates continued
to increase while assessments were skyrocketing. These increases magnified the
effect of the increased assessments, particularly for properties that were not
subject to the homestead cap.
|
2001 |
2002 |
2003 |
2004 |
2005 |
|
.280 |
.265 |
.268 |
.275 |
.288 |