For most people, checking how their home is classified by the Maryland Department of Assessments and Taxation (SDAT) probably isn’t on their radar. But recent headlines have shown how costly this oversight can be. Just ask incoming Senator Angela Alsobrooks who faced tens of thousands of dollars in back taxes on her D.C. property because it was still classified as a senior citizen’s primary residence after the death of her grandparents.
So, why should you care about your home’s classification and how can you make sure yours is accurate? Let’s break it down.
SDAT plays a key role in classifying properties – residential or commercial, owner-occupied or not. While this system is designed to reflect a property’s accurate status when purchased, errors can and do happen. Past miscommunications between Baltimore City Land Records and SDAT have left many properties incorrectly classified. These mistakes also commonly occur when a property is inherited after the owner passes away.
A misclassified property can spell trouble for homeowners. If your home is mistakenly listed as non-owner-occupied or commercial when you actually live there, you could lose access to vital tax benefits like the Homeowners’ Property Tax Credit or Homestead Property Tax Credit. Losing these credits can cost homeowners hundreds or even thousands of dollars annually – enough to push some families into tax sale foreclosure or mortgage foreclosure, putting them at risk of losing their homes. Once in the tax sale process, the problem only intensifies, as commercial properties are subject to higher interest rates to get the house out of tax sale and the process is also allowed to progress much faster, often leaving families scrambling to save their homes.
Beyond taxes, being misclassified as non-owner-occupied can disqualify you from homeowner’s insurance or city and state home repair grant programs. Without these protections and resources, homes are more likely to fall into disrepair, and in the worst cases, become vacant.
But the reverse scenario isn’t any better. If a property incorrectly receives tax credits because it’s listed as owner-occupied when it is not, the owner faces steep consequences. Once the error is discovered, they’ll be required to repay the credits immediately. If they can’t, their case gets handed over to the Central Collections Unit – adding more stress and financial pressure.
An additional issue exists in the city with properties that have a vacant building notice on them when a homeowner is living there. One way in which houses get into this situation is when a vacant property is flipped and sold to a new owner. Sometimes the citations associated with the vacant property are not paid off and the new homeowner is not aware of them when they buy the house. This can escalate into a situation where the homeowner finds themselves in tax sale or even receivership and at risk of losing their home.
Getting your property classification right isn’t just about paperwork. It’s about protecting your home, finances and future.
So how can you make sure your house is properly classified? Visit SDAT’s website and search by your county and street address: https://sdat.dat.maryland.gov/RealProperty/Pages/default.aspx. Take a look at the “Principal Residence” and “Use” categories to check for accuracy. If the information is incorrect, contact SDAT to correct it and continue following up to ensure it was corrected. Search the city’s website to make sure your home is not subject to any vacant building notices or other citations: https://cels.baltimorehousing.org/Search_On_Map.aspx
Taking less than five minutes to check how your property is classified can save you valuable time and money and make sure you are financially secure in your home this holiday season.
Margaret Henn is deputy director of the Maryland Volunteer Lawyers Service (MVLS), which assists low-income homeowners with various housing-related issues, including tax sale, foreclosure and deed transfers. For more information, contact MVLS at mvlslaw.org or 410-547-6537, Monday through Thursday from 9 a.m. to 12 p.m.