Montgomery County, MD

This law requires sellers of homes to provide a potential homebuyer with an estimate of what the actual property tax bill will be in the first full year after purchase of the home

The County wants to make sure that homebuyers have the most accurate information available about property taxes when considering the purchase of a new home. Although the State of Maryland re-assesses residential properties every three years, the amount of the assessment that is taxable for the current homeowner is capped at a 10 percent maximum increase per year. However, when the home changes ownership, the new owner does not get the benefit of the cap that was in place for the previous owner, and will pay tax based on 100 percent of the taxable assessed value for that year. Thus, the amount of tax that the new owner will pay will probably be more than the previous owner would have paid.

The seller is responsible for providing the estimate in any written or electronically transmitted material that is produced or distributed in connection with the advertisement for sale of a specific residential real property located in the county.

Yes, any “written or electronically transmitted material that a seller produces or distributes in connection with the advertisement for sale of a specific residential real property”, as used in County Code §40-12C, does not include, unless the material specifies the amount of tax the seller currently pays or recently paid:

1. a newspaper or magazine classified "liner" advertisement or a "group display" advertisement in which the advertisement for a specific house is less than 16 square inches;
2. one or more introductory screen listings for a specific property on the internet, which may contain the asking price, as long as the disclosure required by §40-12C appears on the internet listing in any later or linked screen which provides further financial details about the property;
3. a "For Sale" sign posted at or near a property; or
4. a radio or television advertisement.

The estimate must include all State and County property taxes (including any applicable special service area tax), any applicable municipal property taxes, and any other non-tax fee or charge included on the consolidated tax bill.

Examples of non-tax fees or charges beare the solid waste charge, the water quality protections charge, front foot benefits charge, and the bay restoration fund fee listed on the annual tax bill.

To see the CURRENT PROPERTY TAX, click Property Tax Account Information and Bill Payment System.

To see the existing development districts map, click here.

The seller of real property located in a development tax district or proposed development district.

In sales contracts, advertisements, sales brochures, signs, or other sales material.

In advertisements the seller must specify that the property is or would be located in a development district and any potential buyer should ask the seller about the additional tax and other charges for which a property owner may be liable.

In sales contracts, in addition to disclosing that the property is located in a development district the seller must also disclose the amount of the charge as well as the dates and amounts of any increases. The law provides specific disclosure language to use in the contracts.

Yes. The disclosure is not required in a printed advertisement that is smaller than 16 square inches or on the initial screen of an internet listing as long as the information appears elsewhere on that listing.

Any contract which does not disclose all required information is voidable at the option of the buyer before the date of settlement. The Office of Consumer Protection can also take action to enforce any violations of this law.

A Development District is a special taxing area created in Montgomery County for which the County issues bonds to finance the construction of public infrastructure (such as roads, parks, trails, etc.) in and near the District, and then levies Development District Special Taxes and Development District Special Assessments on properties in the District to generate revenues to pay the debt service on the bonds.

When the County Council passes the resolution forming the district, it also approves a special taxing methodology for the district. The County follows this methodology each year when it determines the Development District Special Tax and Special Assessment rates. Basically, the County estimates the value of the district at full build-out, and sets the Development District Special Tax at a rate sufficient for the residential property in the district to pay its share of debt service when the district is fully built out. That rate is applied to the assessed value of all property and improvements in the district. For property that is not fully assessed (e.g., the full value of the land and improvements is not showing up yet on the tax bill), and for commercial property, the Development District Special Assessment is levied to make up the difference. For developed residential property, taxpayers should only see a Development District Special Tax. There may be some exceptions if the timing of the property transfer occurs between when the taxes are determined and when the tax bills are sent.

A few months prior to the beginning of the fiscal year (July 1) , the County will set the development district tax rate. The rate will be determined by a calculation using the district’s full assessed value and the amount of tax revenue required to pay the debt service on the bonds that were issued to fund the district’s infrastructure. Typically, the development district taxes will increase approximately 2% a year.

To see the proposed development districts map, click here.