# COMAR Title 18 — Department of Assessments and Taxation

## Subtitle 07 — Property Tax Credits

### Chapter 01 — Homeowners' Tax Credit Program

**Authority:** Tax-Property Article, §§2-201, 2-202, and 9-104, Annotated Code of Maryland

**Administrative History:** Effective date: January 7, 1982 (8:26 Md. R. 2106)

**Administrative History:** Regulations .01—.03 amended effective March 11, 1996 (23:5 Md. R. 384)

**Administrative History:** Regulation .04 adopted as an emergency provision effective June 1, 2000 (27:14 Md. R. 1339); adopted permanently effective December 11, 2000 (27:24 Md. R. 2199)

**Administrative History:** Annotation: COMAR 18.07.01.03 cited in Wargo v. State, 62 Md. App. 620 (1985), in which the requirement that an applicant for the homeowners' tax credit provide a copy of his or her federal income tax return was upheld.

#### Regulation .01 Definitions.

*COMAR 18.07.01.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Affidavit” means a sworn statement in writing on a standard form furnished by the Department.

  (2) “All persons residing in the home” means household occupants as of the date an application is submitted.

  (3) “Applicant” means a person filing for a property tax credit.

  (4) “Combined gross income of all persons” means the monies received in the prior calendar year by the applicant homeowner, the spouse, unless separated, divorced, or widowed, or the resident co-owner, or all of these, and the monies received by other nondependent occupants of the household unless they are paying reasonable fixed charges.

  (5) “Combined net worth” means the net worth of the applicant, spouse or co-owner, or all of these, residing in the dwelling house.

  (6) “Curtilage” means that amount of land necessary and used for the homesite and dwelling.

  (7) “Dependent” means a person who satisfies the federal Internal Revenue Service standard for a dependent.

  (8) “Dwelling house” means the principal residence of a homeowner but does not include any portion of the structure used for a business or income-producing purpose.

  (9) “Principal residence of the homeowner” is the one dwelling house where the homeowner regularly resides and is the location designated by the owner for the legal purpose of voting, obtaining a driver's license, and filing income tax returns.

  (10) “Reasonable fixed charges” means the amount of room and board, rent, or expenses paid which are sufficient to defray the cost of an individual residing on the premises.

  (11) “Total income” means all monies received by a person in a given year, whether taxable for federal or State income tax purposes, or not.

#### Regulation .02 Criteria Adopted.

*COMAR 18.07.01.02*

The following criteria have been adopted by the Department in the processing of applications for the Homeowners' Tax Credit Program:

A. Curtilage.

  (1) The amount of real property taxes eligible for credit consideration is calculated upon the curtilage, which shall include:

    (a) The land occupied by the dwelling house and garage and assessed at a primary rate;

    (b) The amount of any additional land insufficient in size according to local zoning requirements for another homesite and assessed at a lesser rate, excluding any agriculturally assessed land.

  (2) The curtilage determined under §A(1) of this regulation shall be posted to the assessment field card by the local supervisor of assessments.

B. Dwelling House.

  (1) The amount of real property taxes eligible for credit consideration shall be calculated on the curtilage as defined in §A(1) of this regulation and the dwelling house, which is used as the principal residence of a homeowner.

  (2) A trailer may qualify as a dwelling house if it meets all of the following criteria:

    (a) The trailer is the principal residence of its owner;

    (b) The trailer is not located in a trailer park, as defined by local zoning ordinances, where an excise tax is collected by the local government under Article 24, §9-401, Annotated Code of Maryland;

    (c) The owner of the trailer is not paying a fee for the privilege of using the parking space as defined in Tax-Property Article, §8-234, Annotated Code of Maryland;

    (d) The owner of the site upon which the trailer is located has established a separate property tax account for the site;

    (e) The owner of the trailer receives a separate property tax bill for the trailer.

C. Combined Gross Income of All Persons Residing in the Home.

  (1) An applicant shall report on the application the combined gross income of all persons residing in the home, if the persons are not dependents, or not paying reasonable fixed charges.

  (2) An applicant who refuses to submit the information required under §C(1) of this regulation shall be denied a property tax credit.

D. Dependent. An applicant who claims a person is a dependent, but who does not file a federal income tax return, shall submit verification of the dependency status to the Department in the form of a sworn affidavit.

E. Reasonable Fixed Charges.

  (1) A fixed charge reported by an applicant is considered reasonable if it equals one of the following amounts:

    (a) A minimum weekly standard established by the Department;

    (b) Ten percent of the nondependent occupant's gross income;

    (c) Ten percent of the applicant's combined gross income;

    (d) The aggregate of all individual expenses paid by the occupant to assist in the maintenance of the dwelling house;

    (e) An amount the local supervisor of assessments or tax credit administrator finds sufficient in cases of extreme hardship.

  (2) An applicant who does not state initially on the application form the amount of a reasonable fixed charge received from a person shall execute a sworn affidavit.

F. Total Income.

  (1) Total income, whether taxable for federal or State income tax purposes or not, shall be reported on the tax credit application, and requires:

    (a) The counting of 100 percent of capital gains and dividends;

    (b) The disallowance of capital losses in excess of capital gains;

    (c) The disallowance of depreciation as a business deduction;

    (d) The disallowance of all federal adjustments to personal income except employee business expenses and the penalty for early withdrawal of savings.

  (2) Total income does not include lump-sum life insurance payments, research grants, and Veterans Administration educational benefits.

G. Recovery of Tax Credits.

  (1) The Department shall recover under Tax-Property Article, §9-104(o), Annotated Code of Maryland, the excess amount of credit granted in the following instances:

  (2) The Department shall request repayment of the excess credit amount from the owner of the dwelling house and shall direct the local city or county treasurer to place a lien on the property if payment is not received.

    (a) The dwelling house is sold before the end of the taxable year for which a credit was granted;

    (b) The dwelling house is transferred to the heirs of an applicant before the end of the relevant taxable year;

    (c) The dwelling house initially was granted an improper amount of tax credit as determined upon a post audit investigation;

    (d) The homeowner dies before the end of the taxable year for which a credit was granted.

H. Timeliness of Application. The Department shall consider an application as timely under Tax-Property Article, §9-104(k), Annotated Code of Maryland, if the application is postmarked or received on or before the applicable date.

I. Illness or Need of Special Care. For purposes of Tax-Property Article, §9-104(j), Annotated Code of Maryland, “illness or need of special care” means that the applicant, spouse, or dependents are actually in need of ongoing medical treatment at a level which cannot be provided in the dwelling house.

#### Regulation .03 Application Procedures Established.

*COMAR 18.07.01.03*

A. The Department of Assessments and Taxation has established specific procedures for applicants to complete the Homeowners' Tax Credit application.

B. Application Procedures Listed.

  (1) An applicant shall submit with the application form copies of the federal income tax return and accompanying schedules and forms.

  (2) An applicant who has a substantial ownership interest in a business or partnership shall submit a complete copy of the federal tax return filed for that business or partnership.

  (3) An applicant may be requested to complete an affidavit to substantiate any information reported on the application.

  (4) An applicant seeking to exclude the income of a spouse on the basis of a marital separation shall complete an affidavit setting forth the date separation occurred and stating the unlikelihood of the spouse returning to the dwelling house.

  (5) An applicant not filing by the September 1 deadline shall complete an affidavit stating the reason for the untimely filing if the application is to be considered for an extension.

  (6) An applicant who can submit proof that the applicant is a home purchaser under Tax-Property Article, §9-104(k-1), Annotated Code of Maryland, may file an application by June 30 of the taxable year for which the credit is sought.

  (7) An applicant who, pursuant to a court order or separation agreement, permits a spouse, former spouse, or children of that person to reside in the dwelling house without payment of rent, shall submit with the application a copy of the court order.

  (8) An applicant who refuses to submit any information required under Tax-Property Article, §9-104, Annotated Code of Maryland, and the regulations, shall be denied a tax credit for failure to substantiate the income reported.

  (9) An applicant who provides false or misleading information to the Department may be denied a tax credit.

C. The Department may establish additional application procedures which do not appear here, if considered necessary and if not inconsistent with the regulations.

#### Regulation .04 Home Purchasers.

*COMAR 18.07.01.04*

A. The Department of Assessments and Taxation establishes the following procedures for Homeowners' Tax Credit applicants who are home purchasers under Tax-Property Article, §9-104, Annotated Code of Maryland.

B. Application Procedures Listed.

  (1) The tax credit used to adjust a home purchaser's final tax liability at settlement will be in the form of a check made payable jointly to the home purchaser and the title company, attorney, or agent conducting the settlement.

  (2) A home purchaser shall submit with the application a copy of the executed sale agreement and all other forms required on the application form to verify the income reported.

  (3) A home purchaser shall provide information with the application regarding the name and address of the title company, attorney, or agent conducting the settlement and the specific date chosen for the settlement.

  (4) If a home purchaser fails to provide the Department with the specific date chosen for the settlement, the Department shall use the latest possible settlement date under the contract of sale to calculate the credit. If any additional amount of credit is due, it will be paid to the home purchaser after the settlement occurs.

  (5) If a home purchaser chooses to use the credit due at the time of settlement, the settlement shall be scheduled not sooner than 45 days after the Department receives the application to allow sufficient time for payment by the Comptroller.

  (6) A home purchaser may receive at the time of settlement any credit due only on the current tax year's property tax liability. A home purchaser shall apply separately for a tax credit in any subsequent tax year when application forms and income tax returns applicable for that year are available.

  (7) A home purchaser who fails to meet the conditions or requirements outlined will not receive any credit due at the time of settlement.

### Chapter 02 — Renters' Tax Credit Program

**Authority:** Tax-Property Article, §§2-201, 2-202, and 9-102, Annotated Code of Maryland

**Administrative History:** Effective date: January 7, 1982 (8:26 Md. R. 2106)

**Administrative History:** Regulations .01—.03 amended effective March 11, 1996 (23:5 Md. R. 384)

#### Regulation .01 Definitions.

*COMAR 18.07.02.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Affidavit” means a sworn statement in writing on a standard form furnished by the Department.

  (2) “All persons who are actual occupants of the dwelling” means household residents during the calendar year for which a credit is sought.

  (3) “Applicant” means a person filing for a property tax credit.

  (4) “Combined gross income of all persons” means the monies received in the prior year by the applicant renter, the spouse, unless separated, divorced, or widowed, or the resident co-tenant, or all of these, and the monies received by other nondependent occupants of the household unless they are paying reasonable fixed charges to the applicant renter.

  (5) “Combined net worth” means the net worth of the applicant, spouse or co-tenant, or all of these, residing in the dwelling unit.

  (6) “Dependent” means a person who satisfies the federal Internal Revenue Service standard for a dependent.

  (7) “Dwelling unit” means the principal residence of a renter and may be any type of apartment, an individual house, a duplex, a co-op or condominium, or a house trailer or trailer pad.

  (8) “Principal residence of the renter” is the one dwelling unit where the renter regularly resides and is the location designated by the renter for the legal purpose of voting, obtaining a driver's license, and filing income tax returns.

  (9) “Leasehold interest” means a tenancy in the dwelling unit held under a written lease.

  (10) “Persons 60 years old or older” means a person who reached that age as of December 31 of the year for which a credit is sought.

  (11) “Reasonable fixed charges” means the amount of room and board, rent, or expenses paid which are sufficient to defray the cost of a person residing on the premises.

  (12) “Reasonable value of utilities” means the cost of providing heat, gas, or electricity for the dwelling unit.

  (13) “Total income” means all monies received by a person in a calendar year, whether taxable for federal or State income tax purposes or not.

#### Regulation .02 Criteria Adopted.

*COMAR 18.07.02.02*

The following criteria have been adopted by the Department in the processing of applications for the Renters' Tax Credit Program:

A. Eligibility.

  (1) A Renters' Tax Credit shall be available to all persons who meet the following requirements:

    (a) The individual meets the requirements of Tax-Property Article, §9-102(a)(9), Annotated Code of Maryland, or is the surviving spouse of an individual satisfying the qualification;

    (b) The individual has a bona fide leasehold interest in the dwelling unit, which may not be owned by a public housing authority or an organization exempt from the payment of property taxes;

    (c) The individual has resided in the dwelling unit in Maryland for at least 6 months during the calendar year for which the credit is sought;

    (d) The individual, spouse or resident co-tenant, or all of these, have a combined net worth of less than $200,000, as defined in Tax-Property Article, §9-102(i)(2), Annotated Code of Maryland;

    (e) The person qualifies on the basis of the formula established in Tax-Property Article, §9-102(h), Annotated Code of Maryland, for comparing the combined gross income reported to the assumed real property taxes included in the occupancy rent, as those terms are defined in Tax-Property Article, §9-102(g), Annotated Code of Maryland, and the regulations;

    (f) The person submits a complete application furnishing all information required under Tax-Property Article, §9-102(f), Annotated Code of Maryland, and the regulations.

  (2) A person failing to meet the requirements under §A(1) of this regulation shall be notified in writing of the reason by the Department.

B. Reasonable Value of Utilities.

  (1) The amount of tax credit shall be calculated on 15 percent of the total rent paid to occupy the dwelling unit in the calendar year reduced by the reasonable value of any utilities included in the rent.

  (2) The reasonable value of utilities shall be determined according to the following criteria:

    (a) If the cost of heat and electricity or gas all have been included in the monthly rent charge, the total rent for the calendar year eligible for credit consideration shall be reduced by 18 percent.

    (b) If only the cost of heat has been included in the monthly rent charge, the total rent for the calendar year eligible for credit consideration shall be reduced by 12 percent.

    (c) If only the cost of electricity or gas has been included in the monthly rent charge, the total rent for the calendar year eligible for credit consideration shall be reduced by 6 percent.

C. Combined Gross Income of All Occupants.

  (1) An applicant shall report on the application the combined gross income of all persons who are actual occupants of the dwelling unit, if the persons are not dependents, or not paying reasonable fixed charges.

  (2) An applicant who refuses to submit the information required under §C(1) of this regulation shall be denied a property tax credit.

D. Dependent. An applicant who claims a person is a dependent, but who does not file a federal income tax return, shall submit verification of the dependency status to the Department in the form of a sworn affidavit.

E. Reasonable Fixed Charges.

  (1) A fixed charge reported by an applicant is considered reasonable if it equals one of the following amounts:

    (a) A minimum weekly standard established by the Department;

    (b) Ten percent of the nondependent occupant's gross income;

    (c) Ten percent of the applicant's combined gross income;

    (d) The aggregate of all individual expenses paid by the occupant to assist in the maintenance of the dwelling unit;

    (e) An amount the local supervisor of assessments or tax credit administrator finds sufficient in cases of extreme hardship.

  (2) An applicant who does not state initially on the application form the amount of a reasonable fixed charge received from a person shall execute a sworn affidavit.

F. Total Income.

  (1) Total income, whether taxable for federal or State income tax purposes or not, shall be reported on the tax credit application and requires:

    (a) The counting of 100 percent of capital gains and dividends;

    (b) The disallowance of capital losses in excess of capital gains;

    (c) The disallowance of depreciation as a business deductions;

    (d) The disallowance of all federal adjustments to personal income except the penalty for early withdrawal of savings.

  (2) Total income does not include lump-sum life insurance payments, research grants, and Veterans Administration educational benefits.

G. Timeliness of Application. The Department shall consider an application as timely under Tax-Property Article, §9-102(f), Annotated Code of Maryland, if the application is received or postmarked on or before the applicable date.

#### Regulation .03 Application Procedures Established.

*COMAR 18.07.02.03*

A. The Department of Assessments and Taxation has established specific procedures for applicants to complete the Renters' Tax Credit application.

B. Application Procedures Listed.

  (1) An applicant shall submit with the application form copies of his federal income tax return and accompanying schedules and forms.

  (2) An applicant may be requested to complete an affidavit to substantiate any information reported on the application.

  (3) An applicant seeking to exclude the income of a spouse on the basis of a marital separation shall complete an affidavit setting forth the date separation occurred and stating the unlikelihood of the spouse returning to the dwelling unit.

  (4) An applicant may be required to submit proof of the leasehold interest.

  (5) An applicant who refuses to submit any information required under Tax-Property Article, §9-102, Annotated Code of Maryland, and the regulations, shall be denied a tax credit for failure to substantiate the application.

  (6) An applicant who provides false or misleading information to the Department may be denied a tax credit.

C. The Department may establish additional application procedures which do not appear here, if considered necessary and if not inconsistent with the promulgated regulations.

### Chapter 03 — Homestead Property Tax Credit Program

**Authority:** Tax-Property Article, §§2-201, 2-202, 2-218, and 9-105, Annotated Code of Maryland

**Administrative History:** Effective date: November 8, 1993 (20:22 Md. R. 1709)

**Administrative History:** Regulation .03 adopted effective June 30, 2008 (35:13 Md. R. 1181)

#### Regulation .01 Definitions.

*COMAR 18.07.03.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Actually occupied” means that the homeowner physically resides in the dwelling for the required time period.

  (2) “Expected to be actually occupied” means the homeowner intends to reside in the dwelling for the required time period except for an unforeseen absence due to illness or need of hospitalization or special care.

  (3) “Principal residence” is the one dwelling where the homeowner regularly resides and is the location designated by the owner for the legal purposes of voting, obtaining a driver's license, and filing income tax returns.

#### Regulation .02 Verification of Owner Occupancy.

*COMAR 18.07.03.02*

The Department may request documentation to verify that a dwelling is the principal residence of a homeowner. This documentation may include, but is not limited to, requiring an individual to execute a sworn affidavit regarding residency for purposes of voting, driver's license address, and income tax filing. Failure to provide the requested information within 30 days from the date of a request shall result in a dwelling being designated as non-owner-occupied for purposes of the Homestead Property Tax Credit.

#### Regulation .03 Cooperative Corporations.

*COMAR 18.07.03.03*

A. Pursuant to Tax-Property Article, §9-105, Annotated Code of Maryland, dwellings occupied through membership in a cooperative corporation are eligible for the Homestead Property Tax Credit.

B. The following information shall be provided for the Department to administer the credit:

  (1) For a dwelling's initial eligibility for the credit:

    (a) The name of any individuals holding membership in the cooperative corresponding to the dwelling; and

    (b) Documentation under Tax-Property Article, §2-218, Annotated Code of Maryland, verifying that the dwelling is the principal residence of the individuals holding that membership; and

  (2) For a dwelling whose occupants change due to a change of membership in the cooperative:

    (a) The name of any individuals acquiring membership in the cooperative corresponding to the dwelling;

    (b) The date the membership was acquired;

    (c) Whether consideration was given for the membership; and

    (d) Documentation under Tax-Property Article, §2-218, Annotated Code of Maryland, verifying that the dwelling is the principal residence of the individuals holding that membership.

C. The information required by §B of this regulation shall be provided:

  (1) To the Department's local assessment offices;

  (2) Under the signed oath of the individuals holding membership in the cooperative corresponding to the dwelling; and

  (3) On a form furnished by the Department.

D. The information required by §B(2) of this regulation shall be provided within 60 days of the date that a change of membership in the cooperative occurs.

E. Failure or refusal to provide the information required by §B of this regulation will result in a dwelling being designated as not a principal residence for purposes of the credit.

### Chapter 04 — Enterprise Zone Tax Credit Program

**Authority:** Tax-Property Article, §§2-201, 2-202, and 9-103; Article 83A, §5-401 and 5-402; Annotated Code of Maryland

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.04 adopted as an emergency provision effective December 15, 2000 (28:2 Md. R. 97); emergency status expired May 14, 2001; adopted permanently effective May 28, 2001 (28:10 Md. R. 950)

#### Regulation .01 Definitions.

*COMAR 18.07.04.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Business entity” has the meaning stated in Tax-Property Article, §9-103, Annotated Code of Maryland.

  (2) “Certified” means designated by a political subdivision as complying with the standards submitted by the subdivision as provided in Article 83A, §5-402(d)(4), Annotated Code of Maryland.

  (3) “Date of finality” has the meaning stated in Tax-Property Article, §1-101(i), Annotated Code of Maryland.

  (4) “Eligible assessment” means the value of qualified personal property which is initially purchased, acquired, leased, transferred, or otherwise brought into Maryland by a certified business entity from January 1 of the calendar year that entity is first certified until the underlying focus area expires.

  (5) “Focus area” has the meaning stated in Article 83A, §5-401, Annotated Code of Maryland.

  (6) “Political subdivision” has the meaning stated in Article 83A, §5-401, Annotated Code of Maryland.

  (7) “Qualified personal property” means personal property located in a focus area.

  (8) “Tax credit” means the enterprise zone tax credit provided for in Tax-Property Article, §9-103, Annotated Code of Maryland.

  (9) “Taxable year” has the meaning stated in Tax-Property Article, §1-101(ii), Annotated Code of Maryland.

#### Regulation .02 Duration of Credit for Personal Property.

*COMAR 18.07.04.02*

Qualified personal property entitled to an eligible assessment may receive a tax credit for 10 consecutive taxable years regardless of whether the underlying focus area expires.

#### Regulation .03 Certification for Personal Property.

*COMAR 18.07.04.03*

In order to administer the tax credit, the Department shall receive annually, on or before the date of finality immediately preceding the taxable year for which the tax credit is to be granted, a listing as to the:

A. Business entities certified for the tax credit; and

B. Date the business entities were certified for the tax credit.

#### Regulation .04 List of Eligible Assessments.

*COMAR 18.07.04.04*

In each taxable year, the Department shall submit to the appropriate governing body a listing of the amount of the eligible assessments for each certified business entity.