SB 63
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Enrolled - Revised
Senate Bill 63 (Senator Hayes)
Budget and Taxation Ways and Means
Baltimore City - Property Tax Credit for Newly Constructed Dwellings -
Reauthorization and Modification
This bill reauthorizes Baltimore City to grant a property tax credit for specified newly
constructed dwellings by extending the termination date of the property tax credit from
June 30, 2019, to June 30, 2025. The bill also alters eligibility requirements for the
property tax credit as well as the calculation of the property tax credit. The bill takes effect
June 1, 2020, and applies to taxable years beginning after June 30, 2020.
Fiscal Summary
State Effect: None.
Local Effect: Baltimore City property tax revenues decrease by approximately
$1.2 million in FY 2021 and by $3.9 million in FY 2025. Expenditures are not affected.
Small Business Effect: None.
Analysis
Bill Summary: An eligible dwelling is defined as residential real property that is a newly
constructed dwelling or a substantially rehabilitated dwelling. A major building component
is a component, at least 50% of which is replaced, that (1) is significant to the dwelling and
its use; (2) is normally expected to last the useful life of the dwelling; and (3) is not minor
or cosmetic. A major building component includes roof structures; wall or floor structures;
foundations; or plumbing, central heating and air conditioning, or electrical systems.
A substantially rehabilitated dwelling is defined as residential real property that, on or after
July 1, 2020, has undergone repairs, replacements, or improvements (1) of two or more
major building components; (2) that comply with local laws and regulations; and (3) for
which the direct construction costs incurred by the owner exceed $6,500 or, after the
completion of the repairs, replacements, or improvements, 30% of the property’s assessed
value in the taxable year. A substantially rehabilitated dwelling does not include a specified
rehabilitated vacant dwelling.
The amount of the property tax credit varies depending on the assessed value of the
dwelling and the property tax credit phases out after five years.
Current Law: Baltimore City was authorized to grant a property tax credit against
city property taxes imposed on newly constructed dwellings owned by qualified owners,
prior to the termination of the law. Homeowners had 90 days from the settlement date to
apply for the credit. The credit is 50% for the first taxable year and decreases by
10 percentage points each year until it expires after the fifth year.
Baltimore City was authorized to (1) establish, by law, maximum limits on the
cumulative amount of the credit that may be allowed for any year; (2) establish, by law,
two application periods for the tax credit; and (3) grant, by law, a one-time amnesty period
for owners who failed to meet the application deadline and who were denied the tax credit.
The property tax credit terminated June 30, 2019. Baltimore City passed legislation
(19-0414) for specified high performance newly constructed dwellings. The legislation
terminates June 30, 2021.
Background: Chapter 616 of 1994 authorized Baltimore City to grant newly constructed
or first purchased dwellings a property tax credit. Chapter 137 of 2000 extended the
June 30, 2000 termination date until June 30, 2002. Chapter 493 of 2002 extended the
June 30, 2002 termination date until June 30, 2005, and repealed the authorization for a
city property tax credit for first purchased dwellings. Chapter 474 of 2005 extended the
June 30, 2005 termination date until June 30, 2007. Chapter 228 of 2007 extended the
June 30, 2007 termination date until June 30, 2009. Chapter 373 of 2009 extended the
June 30, 2009 termination date until June 30, 2014. Chapters 478 and 479 of 2014 extended
the June 30, 2014 termination date to June 30, 2019. Exhibit 1 summarizes the number
and amount of the credits since fiscal 1996.
Local Fiscal Effect: Baltimore City estimates that extending the tax credit will reduce
property tax revenues by approximately $1.2 million in fiscal 2021 and by $3.9 million in
fiscal 2025. However, the actual decrease depends on the number of newly constructed
dwellings that are eligible for the tax credit during each fiscal year.
SB 63/ Page 2
Exhibit 1
Baltimore City Property Tax Credit for Newly Constructed Dwellings
Fiscal Year Number of Credits Amount of Credits
1996 30 $20,295
1997 199 133,333
1998 15 229,663
1999 149 309,237
2000 141 330,747
2001 130 418,921
2002 211 481,490
2003 128 704,261
2004 165 1,120,122
2005 240 1,471,194
2006 474 1,653,005
2007 446 2,837,490
2008 444 2,848,550
2009 376 3,999,694
2010 371 5,002,670
2011 247 4,016,030
2012 233 3,164,268
2013 253 3,619,532
2014 226 3,147,838
2015 188 2,823,800
2016 259 2,354,271
2017 203 2,296,387
2018 149 2,022,954
2019* 218 2,139,502
Note: Fiscal 2019 represents credits granted through March 2019.
Additional Information
Prior Introductions: None.
Designated Cross File: HB 1189 (Delegate Smith) - Ways and Means.
SB 63/ Page 3
Information Source(s): Baltimore City; State Department of Assessments and Taxation;
Department of Legislative Services
Fiscal Note History: First Reader - January 14, 2020
rh/hlb Third Reader - March 17, 2020
Revised - Amendment(s) - March 17, 2020
Enrolled - April 2, 2020
Revised - Amendment(s) - April 2, 2020
Analysis by: Michael Sanelli Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 63/ Page 4
Statutes affected: Text - First - Baltimore City - Property Tax Credit for Newly Constructed Dwellings - Reauthorization and Modification: 9-304 Tax Property
Text - Third - Baltimore City - Property Tax Credit for Newly Constructed Dwellings - Reauthorization and Modification: 9-304 Tax Property
Text - Enrolled - Baltimore City - Property Tax Credit for Newly Constructed Dwellings - Reauthorization and Modification: 9-304 Tax Property