by Dan Krell
As the end of the year is a time of reflection, let’s reflect on the new legislation that directly affects home owners and home buyers. Although this is not a complete list of new laws, here are a select few that concern taxation, eminent domain, and privacy.
Buying a home in Montgomery County will cost a bit more next year as recordation tax rates will increase effective March 1, 2008. Current recordation tax rate is $3.45 per $500 (or more commonly described as $6.90 per $1,000); the first $50,000 of the purchase price is exempt from this tax if the purchaser will live in the home. The new recordation tax rate will add an additional $1.55 per $500 (a total of $5.00 per $500) for any amount over $500,000.
Confusion about property taxes and new tax assessments will hopefully be a thing of the past as the property tax disclosure requirement will go into effect April 1, 2008. The law requires any home seller to disclose present and estimated future property taxes for the property for sale. The tax amount must contain the current state, county, and municipality tax as well as any special services tax imposed. The estimated future tax must represent an accurate portrayal of any future tax increase. Estimating future property tax increases may sound tough, but don’t worry – the Montgomery County Department of Consumer Protection is required to assist home sellers and real estate agents with the tax estimations.
Additional property tax legislation includes the Homestead Tax Credit. The credit caps any property tax increase due when the home is reassessed. For homes purchased after December 31, 2007, the law requires home owners to file the one-time application within 180 days of the purchase. All other home owners have until December 31, 2012 to file the application.
Eminent domain has been a recent hot topic. Four changes to eminent domain in Maryland went into effect July 1, 2007. The first is the requirement to file for condemnation within four years of the decision to acquire the property. Subsequent changes increased the cap on mandatory payments to the displaced: the cap to displaced property owners increased to $45,000; the cap to displaced tenants of rental property increased to $10, 500; and the cap for moving and relocation expenses increased to $60,000.
Privacy protection is always a concern. However, effective January 1, 2008, all businesses including real estate brokers are required to take “reasonable steps” to ensure that personal information is protected when client records are destroyed. Additionally, businesses are required to notify their clients as well as the Maryland Attorney General’s office if there is a security breach of electronic files containing client information.
Also becoming effective January 1, 2008 is the ability for a consumer to place a security freeze on their credit report. Without the freeze, anyone with basic information can request a credit report. If the freeze is requested, the information can not be accessed without express prior authorization of the consumer.
For more information on the new legislation, you can go to the Maryland General Assembly website (http://mlis.state.md.us) or the homepage for the County Council of Montgomery County (www.montgomerycountymd.gov/csltmpl.asp?url=/content/council/index.asp).
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of December 31, 2007. Copyright © 2007 Dan Krell.