They Were Shocked By Their Tax Assessed Values

They Were Shocked By Their Tax Assessed Values

Every three years, in Maryland, properties are assessed to determine their value for tax purposes.

Supposedly, the assessed values are in accordance with actual market values.

When real estate prices went up a few years ago during the boon in the market at percentages reaching 20 percent per year, the tax assessed values went up accordingly.

Fortunately, the property tax for existing homeowners did not go up by the same amount, even though their property's assessed values had gone up. This was due to the Homestead Act, which limited the annual increase in their taxes to 4 percent per year. Unfortunate for home buyers, they would be hit with the full amount of taxes for the assessed value.

In recent years, tax assessed values came down in accordance with the rapid decline of values in the actual market.

One would think that a homeowner would be happy about a lower assessed value in that it would mean potentially lower property taxes. The word potential is used because due to the Homestead Act, they may not actually see a decrease in their taxes, in spite of the lower assessed values.

However, two individuals had just received their new tax assessments and they were disturbed by how much their properties had decreased in assessed value. Their decreases were about 78 percent.

Had they not been following the news? Did they think that none of what was happening in the real estate market had anything to do with them? Did they think that they were immune from the effects of the macroeconomy?