The following special limitations on applications are contained in the tax credit enabling statute found at Section 9-104 Tax-Property Article of the Maryland Annotated Code, and some of the individual restrictions have been clarified further by the Maryland Courts as well as by formal regulations promulgated by the Department in the Code of Maryland Regulations (COMAR).

1. The dwelling for which a credit application is being made must be the principal residence of the applicant, where he or she resides or expects to reside for more than 6 months of some 12-month period, unless unable to do so for reasons of illness or need of special care. [Section 9-104(a)(b) and (j)]. Such 6-month period begins with July 1, of the taxable year for which the credit is sought. Sally G. Plager v. State Dept. of Assessments and Taxation, Maryland Tax Court, Miscellaneous No. 421 (1981).
   
   The six (6) month residency requirement as interpreted by the Maryland Tax Court has certain practical results for the processing of applications. First, if an applicant has filed before July 1, but dies before six months has elapsed from the July 1, date, then no credit will be allowed unless there is a surviving spouse or resident heir. A discussion at item 13 under this same topic as to why an attorney may not delay the termination of the credit by waiting until the end of the year to transfer the property to a nonresident heir. Second, if an applicant dies before filing the application but he or she was living in the property after July 1, then no credit may be issued to the estate because there is not a possibility or an expectation of the applicant residing in the dwelling for six months of the taxable year. Of course, any heir who was residing in the property with the deceased owner as of July 1, could reapply for the credit in his or her own right once the necessary legal interest was established. Finally, if an applicant files before July 1, but the Department learns that the applicant died before July 1, then no amount of credit should be issued since there was no homeowner resident in the dwelling as of the specific July 1, date.
2. A homeowner or homeowners may claim credit in only one dwelling. [Section 9-104(i)(3)].
3. The credit shall not be allowed to any applicant homeowner and spouse whose combined net worth is in excess of $200,000 as of December 31 of the calendar year preceding the year in which the application is made for the tax credit. [Section 9-104 (i)(1); COMAR 18.07.01.0lB(5)]. Net worth is defined at Section 9-104(a)(2) & (12) to mean the value of assets less their outstanding liabilities but does not include the value of the dwelling for which the credit is sought, except insofar as there is acreage in excess of the homesite curtilage.
4. The taxes subject to credit consideration are limited to the total real property taxes calculated on the assessed valuation of the dwelling and the lot or homesite curtilage on which it is erected [Subsection 9-104(a)(6) & (13)]. In the cases where the applicant owns a dwelling surrounded by a large tract of land, the credit shall be limited to "curtilage" which is that amount of land necessary and/or used for the dwelling. [COMAR 18.07.0l.02(A)(1)]. A detailed explanation of how the "curtilage" value is calculated by Assessment Office personnel is in procedure 19:30:12.
5. A maximum of $150,000 of assessed valuation shall be eligible for consideration in calculation of the tax credit [Section 9-104(a)(13)].
6. The credit does not include the taxes on any portion of a dwelling used for a commercial business or nonresidential purpose [COMAR 18.07.0l.0l.(B)(8)].
7. Any metropolitan or fixed charges that may appear on the applicant homeowner's tax bill are not taxes subject to credit consideration [Section 9-104(a)(13)].
8. Any tax credit allowed under the separate provisions at Section 9-105 for assessment increases in excess of certain limits shall be deducted from the total real property taxes subject to Homeowners' Tax Credit consideration [Section 9-104(a)(13)].
9. Eligible homeowners shall receive a tax credit equal to the amount when the total real property taxes subject to credit consideration are in excess of 0% of the applicant's first $4,000; 1% of the next $4,000; 4.5% of the next $4,000; 6.5% of the next $4,000 and 9.0% of all combined gross household income over $16,000 [Section 9-104(g)].
10. If an applicant homeowner is eligible for a credit of less than $1.00 in any taxable year, a credit will not be allowed for that year [Section 9-104(i)(2)].
11. Eligible homeowners shall redeem the tax credit provided under this program in the taxable year in which it was issued or in the next succeeding taxable year only [Section 9-104(i)(4)]. For example, a 2000 Homeowners' Tax Credit issued for taxable year beginning July 1, 2000 could not be redeemed after June 30, 2002. The one exception to the two year limitation on the validity of a tax credit is in cases where the homeowner's property is being sold at tax sale. In that limited instance, the credit may be redeemed after two years because of the presumption that the homeowner did not have the financial means to redeem the credit by paying the remaining outstanding tax liability.
12. Whenever a homeowner sells or transfers his or her legal interest in a dwelling subject to this property tax credit, a portion of the tax credit shall be repaid to the State by the purchaser or transferee reflecting the extent to which the amount of credit bears to the remainder of the taxable year on the date of transfer [Section 9-104(0); COMAR 18.07.01.03(G)(1)(a) & (b)]. In cases of the death the applicant homeowner, who is not survived by a spouse, the date of death is the date of transfer no matter when record title is recorded in the name of the subsequent transferee. Death operates as a transfer "by operation of law." In the case of sales of property, the date of settlement shall be deemed the transfer date.
    The tax credit is recaptured on a daily prorata basis, and the local Finance Office may calculate the repayment of the tax credit on a 360-day calendar year (30-day per month) method. No tax credit repayment need be collected when only five days or less remain in the taxable year. [See a detailed discussion of the specific requirements for recapture of tax credits at the separate topic in this manual entitled "Audit of Recaptured Tax Credits", procedure 12:50:20].
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