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Saturday, June 10, 2023

How Tax Sale Works

Question: 

What are my options if my house is on the tax sale list? 

Answer: 

Each year, Baltimore City sells homeowners’ unpaid city bills to outside bidders who then charge interest and fees, allowable under state law, to property owners. The 2023 Tax Sale will take place on May 15.

An owner-occupied property is eligible for tax sale if the total of its unpaid city bills is $750 or more. These liens include unpaid real property taxes, special benefits assessments, alley and footway paving bills, streetscape, minor privilege, multi-family dwelling, clean and board, environmental control citations and residential registration charges and fees. Unpaid water bills no longer count towards the $750 tax sale eligibility threshold for owner-occupied properties.

The tax sale process is confusing, incredibly difficult to navigate and all too often homeowners are not adequately informed throughout the process. With tax sale approaching next month, it’s important to know a few things to make sure your home stays out of the tax sale. 

The last day to pay overdue bills to avoid tax sale is April 28, 2023.

A few options or programs that are available to protect yourself from tax sale are: 

Maryland Homeowners’ Property Tax Credit

A homeowner is eligible for this credit if they: 1) own and live in their home; and 2) have a total gross household income of $60,000 or less. The State of Maryland sets a limit on the amount of property tax a homeowner must pay based on their total gross household income. If the homeowner is paying more than the set limit, the property tax is reduced accordingly. For the first time, in 2019 homeowners were able to apply for this credit online. Homeowners must apply every year for this credit. The deadline to apply is usually October 1. However, if you apply by April 15, 2023, a credit will be added to your bill if you’re eligible.

Maryland Homestead Tax Credit

Every Maryland homeowner who owns and lives in their home is eligible for this credit. It shields homeowners from large property tax increases on their principal residence by limiting the annual increase in their property’s assessment value (this limit is 4% in Baltimore City). A homeowner must successfully apply only once for this credit. It is thereafter applied every year. There is no deadline for this application.

To learn more about the Maryland tax credits, click here or call 410-767-4433 or 443-961-6220.

Tax Sale Deferral Program

The Tax Sale Deferral Program (formerly known as the Tax Sale Exemption Program) is an annual city program managed by the Departments of Finance and Housing and Community Development. Successful applicants have their properties removed from a tax sale in the year they apply. However, this program does not forgive unpaid bills, and if the bills are not paid, they may qualify the property for tax sale the next year.

The number of properties removed from tax sale through this program is limited, and applications are reviewed on a first-come, first-served basis. So, it is best to apply as early as you can. Applications are accepted February 15 – April 15 each year. 

You must apply every year for this deferral. You can apply online by clicking here.

For more information regarding the application process, please call the Department of Finance at 410-396-3000 or email the Department of Housing & Community Development by clicking here.

Maryland Homeowner Assistance Fund

The Maryland Homeowner Assistance Fund provides residential mortgage and tax delinquency assistance in the form of grants and loans to Maryland homeowners who have experienced hardship during the COVID-19 pandemic to avoid loss of residence for eligible homeowners. For more information on qualifications, visit:
https://dhcd.maryland.gov/Residents/Pages/HomeownerAssistanceFund.aspx

Baltimore Tax Sale Clinics

Homeowners may receive free legal consultation and assistance by attending a tax sale clinic. Homeowners thinking about applying for the Tax Sale Exemption Program may want to seek a consultation to make sure they’re also receiving all potential benefits. Homeowners can call the Pro Bono Resource Center of Maryland at 443-703-3052 to learn more about the tax sale prevention clinics.

Water4All  

This new water assistance program for Baltimore City residents provides a monthly discount for water and sewer costs based on a percentage of the residents’ income. For the first time, tenants who do not directly pay their water bills are eligible to apply for water payment assistance.

Aja’ Mallory is a staff attorney at the Maryland Volunteer Lawyers Service. Her practice focuses on housing and consumer issues for Marylanders of limited means.

Do you have a question you would like to see addressed in this column? Email [email protected] to submit your question to The Baltimore Times’ legal tip column.

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