Renters' Tax Credits
The Renters' Tax Credit Program provides property tax credits for renters who meet certain requirements. The plan was modeled after and designed to be similar in principle to the Homeowners' Tax Credit Program, which is known to many as the Circuit Breaker Program. The concept rests on the reasoning that renters indirectly pay property taxes as part of their rent and thus should have some protection, as do homeowners.
The plan is based upon the relationship between rent and income. If the portion of rent attributable to the assumed property taxes exceeds a fixed amount in relation to income, the renter can, under specified conditions, receive a credit of as much as $750. The credit is paid as a direct check from the State of Maryland.HOW A RENTED DWELLING IS DEFINED
The rented dwelling may be an apartment in an individual house or any type of apartment building, duplex, co-op, condominium, house trailer, or mobile home pad. The dwelling must be the principal residence in Maryland and the renter must live there at least six months of the year. You are only eligible to receive a tax credit for rent paid in the State of Maryland.
The applicant must have a bona fide leasehold interest in the property and be legally responsible for the rent. If the dwelling that is rented is owned by a tax exempt, charitable organization or is exempt in any way from property taxation, a tax credit cannot be granted.HOW TO DETERMINE IF YOU MAY BE ELIGIBLE
COMBINED INCOMES: Credits are calculated according to total income, meaning all combined gross household income before deductions. This includes income from all sources, whether or not taxable for federal and state income tax purposes. It also includes Social Security as well as all other retirement benefits.AGE 60 OR OVER OR 100% DISABLED
If you are age 60 or over or 100% disabled, use the chart below to determine if it is worthwhile for you to file an application.
Note: A surviving spouse of one who otherwise would have been eligible also qualifies.
1. Find your approximate 2014 total gross household income in Column A.
2. If your monthly rent is more than the figure in Column B across from your income, you may be eligible and are encouraged to apply.
$1 - 5,000 14 6,000 28 7,000 42 8,000 56 9,000 86 10,000 117 11,000 147 12,000 178 13,000 219 14,000 261 15,000 303 20,000 544 25,000 794 30,000 1,044
The rent in Chart 1 assumes that you pay all your own utilities separate from the monthly rent. If the rent includes gas, electric and heat, you may need to have as much as 18% higher monthly rent to qualify for a credit.
Trailer park residents are advised to submit an application and allow this office to determine eligibility.
Chart 1 is a guide only, and the exact amount of your income and rent will be used to determine your eligibility. If you submit an application, the State will determine your eligibility.UNDER 60 YEARS OF AGE
If you are a renter under the age of 60 who, during 2014, had at least one dependent under the age of 18 living with you AND you did not receive federal or state housing subsidies or reside in public housing AND the combined income of all residents of your dwelling is below the following guidelines, you are encouraged to apply.CHART 2
Persons in Household
2 $16,057 3 18,552 4 23,834 5 28,265 6 31,925 7 36,384 8 40,484 9 48,065
Note: If you think you qualify based on the income limits on the above chart, you are encouraged to apply. The State will determine your eligibility using the above chart and the formula that compares rent and income (See Chart 1).WHEN AND HOW TO APPLY
Renters have until September 1 of the year in which the credit is sought to apply, but it is advantageous to file as early as possible.
The standard form on which to apply is provided by the Tax Credits Office of the State Department of Assessments and Taxation.
Applications can be obtained any time after February 1 from your local assessment office or by calling the Tax Credits Telephone Service at 410-767-4433 (Baltimore Area) or 1-800-944-7403 (Toll Free).HOW TO ESTIMATE THE TAX CREDIT
The property tax relief a renter may receive is based upon a comparison of the assumed real property tax in the yearly rent minus a percentage of the household income as shown here:
0% of the first $4,000 of income 2.5% of the next $4,000 of income 5.5% of the next $4,000 of income 7.5% of the next $4,000 of income 9.0% of all in excess of $16,000
Estimating your own tax credit can be done by taking these three steps. Remember, the key to the plan is your rent in relationship to your income.
The plan assumes that 15% of your occupancy rent goes toward the payment of property taxes. Occupancy rent does not include charges for heat, utilities, or any other fees paid with the rent.
- Step 1:
- Find your 2014 income and tax limit from the chart in the next column.
Example: If your income is $11,000, your tax limit is $265.
- Step 2:
- Take 15% of the total occupancy rent for the year 2014.
Example: A monthly rental of $300 would amount to $3,600 a year. Fifteen percent of $3,600 is $540.
- Step 3:
- Subtract your tax limit amount from the assumed property tax.
$540 15% of occupancy rent -$265 tax limit from chart $275 amount of tax credit
The $275 difference is the amount the renter would receive as a tax credit.
The amount of the renters' tax credit will vary according to the relationship between the rent and income, with the maximum allowable credit being $750. Those found eligible for a credit as determined by the State Department of Assessments and Taxation will receive a check directly from the State Treasury. Anyone who is found ineligible will be notified in writing and given the reason why.IMPORTANT: If 15% of your occupancy rent is more than the tax limit amount shown on the schedule below for your income, you are urged to file a Renters' Tax Credit application.
2014 Combined Income Tax Limit $ 0 to 4,000 $ 0 5,000 25 6,000 50 7,000 75 8,000 100 9,000 155 10,000 210 11,000 265 12,000 320 13,000 395 14,000 470 15,000 545 16,000 620 17,000 710 18,000 800 19,000 890 20,000 980 For each additional $1,000 of income, add $90 to $980 to find the tax limit.
Applications should be mailed to:
State Department of Assessments & Taxation
Renters' Tax Credit Program
301 W. Preston Street, Room 900
Baltimore, Maryland 21201-2395