Tax credits for homeowners and renters

Whether the tax stimulus package that was just passed by Congress and signed into law by President Barack Obama has a direct benefit to you may take a bit of time to figure out.

But tax credit programs for Maryland homeowners and renters exist—and have been around for years.

For example, I often find that people do not take advantage of the state’s Homeowners’ Property Tax Credit program and the Renters’ Tax Credit program.

These programs are available for people with incomes that don’t exceed about $30,000 per year. In addition, there are tax-exemption programs that include coverage for persons who are blind, disabled veterans or a surviving spouse of a disabled veteran.

If you qualify, the results include a reduced mortgage payment if you escrow taxes as a part of your payment, getting a check back, and even reduced property taxes.

The process requires that you fill out an application. You must make certain that you fall into the different income or eligibility limitations of each program. But the rewards are fairly significant and well worth the time.

For example, under the Homeowners’ Property Tax Credit program, an eligible person who lives on an income of no more than $12,000 per year has a tax limit of only about $160. This can result in thousands of dollars of savings for the homeowner.

Homeowners’ Tax Credit Program

This is available if:

-the person owns or has a legal interest in the property;
-the property is the principal residence of the applicant;
-the applicant’s net worth, not including the property or retirement savings, is less than $200,000 and the combined gross household income does not exceed $60,000.
-The application must be filed by Sept. 1, 2009. However, I urge you to file by May 1 so that your real property tax bill issued for July will reflect the credit.

If you are paying a mortgage on the property, and your mortgage company is escrowing money for taxes, filing the application in May will ensure that your mortgage company will receive a tax bill that is lower than for a year you did not file. As a result, less will need to be escrowed in the future and your mortgage payment goes down when your escrow account is reviewed by the lender.

You must make certain to file the application each year you are eligible. Further, if you file the application after the taxes are paid by the lender in July, and you receive a credit, you will receive a check.

I suggest you send the check back to the lender so that your escrow account has that credit and the mortgage company can reduce the amount needed to fund the escrow balance.

Renters’ Tax Credit Program

-The filing deadline for this application also is Sept. 1, 2009. The program provides for a direct check of $750 a year to an applicant who pays rent in Maryland.
-This program is available for a person who is:
-at least age 60 or 100 percent disabled or
-younger than 60 with had at least one dependent younger than 18 living with them in 2008, did not receive a state or federal housing subsidy or reside in public housing, and with a combined gross household income below that set out on the application. For example, for a household of two, the gross income limit is $14,291.
-Adjustments to the amount of the tax credit may be made depending on whether or not you pay utilities separate from your rent, the exact amount of your rent and the gross amount of your income.

Finally, there are a number of exemptions—which means you may not have to pay any property taxes at all—from property taxes available under a number of circumstances. Check to see if you fall into any of the categories and file the application. The available exemption applications include:

For Blind Persons

· For Surviving Spouses of Blind Persons

· For Churches, Parsonages, Convents, Educational Buildings, and Church Cemeteries

· For Disabled Veterans

· For Surviving Spouses of Disabled Veterans

· For Surviving Spouse of a Military Casualty

· For Governmentally Owned Property

· For Fraternal, Benevolent, or Educational Property

· For Charitable Property

Complete information on these programs is available at http://www.dat.state.md.us/sdatweb/taxcredits.html.

This column is for general informational purposes only. If you need help, call your local bar association for a referral. Low-income people may qualify for free legal help in some civil cases from Maryland Legal Aid.

Louise M. Carwell is a senior attorney with Maryland Legal Aid in Baltimore, where she has practiced consumer law for more than 20 years. Carwell, a graduate of the Case Western Reserve University School of Law in Cleveland, Ohio, specializes in credit, foreclosure prevention, consumer protection, and bankruptcy. She regularly trains lawyers and paralegals at Legal Aid and speaks to community groups and judges on consumer issues. In addition, Carwell teaches at the University of Baltimore School of Law and the University of Maryland University College.

Are you a credit-wise consumer with a question? Send it to Louise Carwell, c/o Exhibit A, wayne.countryman@exhibitAnews.com