Montgomery County crunches down on property tax credits

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Local,Maryland,Kate Jacobson,Montgomery County

Montgomery County officials are going after homeowners who wrongly received state and county property tax credits.

About 1,956 homeowners received the tax credits worth slightly less than $700, and county officials are estimating they could collect as much as $5.4 million for the credits, incorrectly given out between 2009 and 2012.

County officials have collected about $134,000 from 216 accounts and expect to bill about 900 more in the coming months.

Montgomery County has a 68.8 percent homeownership rate, which equals slightly more than 264,000 homes, according to census data.

The property tax credits are given only to homeowners who live in their house; those who rent out their houses do not qualify.

Rob Hagedoorn, the division chief of treasury in the county's Department of Finance, said in most cases it's not homeowners maliciously taking the tax credit; rather it's that homes are inaccurately classified in county records.

"In some cases, people might not have even known about it," he said. To find the discrepancies, the department compared rentals listed online and what each home was classified under in the county tax code.

The $5 million in potential revenue will be put back into county funds. The county is currently facing a $134 million budget hole for fiscal 2014.

In the housing crash of 2008, many homeowners turned to renting their houses because they couldn't sell and didn't go through the proper channels to acquire a license to rent, which would automatically change the tax classification of a home, Hagedoorn said.

He said the problem possibly also occurred because up until December, homeowners did not have to apply for the credit. Last year, county officials realized they might be losing money and created a unit to double check which homes were getting the credit and which homes should not be.

But the process has now changed: Residents must apply to receive the credit, meaning potentially fewer discrepancies in the future.

The unit is scheduled to report its findings to a County Council committee on Monday. This is the first time the numbers have been documented.

Council President Nancy Navarro, D-Eastern County, said she is interested to hear the unit's take on how the process has been going, and whether it's had an effect on county taxes.

"Obviously, a lot of these things have to do with trying to look very deeply in what's going on," she said, referring to county officials going through minute details in records to find potential sources of revenue. "It's very important, for me, to hear from the administration what their take on this is."

kjacobson@washingtonexaminer.com

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Kate Jacobson

Montgomery County reporter
The Washington Examiner