In an effort to preserve the undeveloped portions of Anne Arundel County, the County Council has passed a bill which promotes the rehabilitation of older, “run down” homes. The Anne Arundel County Housing Revitalization Bill (66-16), which was approved and enacted by County Executive Steve Schuh on October 25th, 2016, hopes to accomplish this by waiving building permit fees and creating a property tax credit.
In short, the bill allows a homeowner to demolish a single family dwelling with a tax assessed value of less than $350,000, rebuild a new home, and experience two great benefits. The first benefit is that the bill exempts a homeowner from the building and grading permit fees relating to the rebuild; this could total thousands of dollars of savings. The second benefit is a property tax credit created by the bill. The bill allows for a tax credit equal to the real property tax increase attributable to the increased assessment. For example, if a homeowner demolishes a dwelling with a current annual tax assessment of $2,000 and rebuilds a home resulting in an annual assessment of $6,000, the homeowner would receive a tax credit of $4,000 per year. The property taxes are essentially frozen at the pre-rehab assessment. The bill allows the homeowner to receive this tax credit annually for five years. In this example the homeowner would realize a $20,000 savings over five years!
The bill currently only allows dwellings to be completely demolished and rebuilt to qualify. The County indicates they would like to allow homeowners who renovate the majority of their home to be able to take advantage of this bill. However, the State of Maryland would have to first pass legislation re-defining the word, “rehabilitation,” statewide.
A few things to keep in mind: the homeowner must file an application for the tax credit on or before June 1st prior to the tax year for which the credit is sought. Anne Arundel County’s tax year runs from July 1st through June 30th. Also, the bill contains a provision which allows it to remain in effect for five years, after which it is repealed. So don’t delay! Start your property search today!