As stated in Procedure 012-150-031, the current year Homestead tax credit is based on the prior year assessment figures that taxes were actually paid on, unless there is a disqualifying event. The exception to this is abatements. When taxes are refunded for a prior year, the amended figures should be reflected in the data system so that the current year Homestead credit is calculated off of the correct basis. The data system automatically makes adjustments for abatements that only go back one year. Abatements that go back more than one year will have to be manually calculated and entered into the system.

Below is an example of a single year abatement, this is the account before any changes, geo-80, use code-R, occupancy code-H, 3% homestead cap, date - 4/1/2002.

Base FCV	Current FCV	2002 Phase-in 2	Current Year (2002) Assmt
Land 50,000	Land 59,000	Total 154,000	Total 154,000
Improvement 90,000	Improvement 102,000	Pref	Pref
Total 140,000	Total 161,000	Cbkr 154,000	Cbkr 154,000
Pref	Pref		Cnty Credit 5,474
Cbkr 140,000	Cbkr 161,000		State Credit 0
			Munic Credit 0
			Credit Status Y
			Prior Year (2001) Assmt
			Total 147,000
			Pref
			Cbkr 147,000
			Cnty Credit 2,800
			State Credit 0
			Munic. Credit 0
			Credit Status Y

The 1/1/2001 FCV of $161,000 was appealed. The first and second appeal levels were affirmed and Md Tax Court reduced the improvement to $96,000 on 4/1/2002. Here an abatement must be done for the 2001 tax year. The new improvement value must be keyed into the system with an effective year 2001. This will have the following effect:

Base FCV	Current FCV	2002 Phase-in 2	Current Year (2002) Assmt
Land 50,000	Land 59,000	Total 150,000	Total 150,000
Improvement 90,000	Improvement 96,000	Pref	Pref
Total 140,000	Total 155,000	Cbkr 150,000	Cbkr 150,000
Pref	Pref		Cnty Credit 1,474
Cbkr 140,000	Cbkr 155,000		State Credit 0
			Munic Credit 0
			Credit Status Y
			Prior Year (2001) Assmt
			Total 145,000
			Pref
			Cbkr 145,000
			Cnty Credit 800
			State Credit 0
			Munic. Credit 0
			Credit Status Y

Note that when the new FCV was keyed effective for the 2001 tax year, both the 2001 and 2002 tax year figures were revised. Also note that the FCV reduction was so small that the phased in assessments did not get reduced below the taxable assessment. Therefore, there was no actual tax refund.

Abatements that go back more than one year are more complicated because they cannot be calculated by the mainframe. The data must be manually calculated and keyed into the system. Below is an example:

A residential property has qualified for a homestead credit for several years. Recently the owner discovered that SDAT has been assessing a detached garage that is not on his property. SDAT is going to remove the garage and grant an abatement for the last three years. Below is picture of the account before any adjustments. Example parameters; date - October 2001, 4% cap, H-occupancy code, Geo-80.

Base FCV	Current FCV	2002 Phase-in 2	Current Year (2002) Assmt
Land 57,000	Land 65,000	Total 187,000	Total 187,000
Improvement 114,000	Improvement 130,000	Pref	Pref
Total 171,000	Total 195,000	Cbkr 187,000	Cbkr 187,000
Pref	Pref		Cnty Credit 19,713
Cbkr 171,000	Cbkr 195,000		State Credit 0
			Munic Credit 0
			Credit Status Y
			Prior Year (2001) Assmt
			Total 179,000
			Pref
			Cbkr 179,000
			Cnty Credit 18,147
			State Credit 0
			Munic. Credit 0
			Credit Status Y

The 2001/2002, 2000/2001, and 1999/2000 tax years will be abated. To do this you must first get the revised full cash values for the last three cycles and the annual phased-in assessment figures from the 1998/1999 tax year (this year will serve as the basis for the revised years).

Revised full cash values:

1/1/1995 FCV	1/1/1998 FCV	1/1/2001 FCV
Land 50,000	Land 57,000	Land 65,000
Improvements 75,000	Improvements 89,000	Improvements 105,000
Total 125,000	Total 146,000	Total 170,000
Pref	Pref	Pref
Cbkr 125,000	Cbkr 146,000	Cbkr 170,000

Below is the assessment data from 1998/1999 tax year. Note that for the 2000/2001 tax year and prior, assessment levels were 40% of phased-in market values, 50% for use value properties.

1998/1999 Assmt

Total 62,800

Pref

Ckbr 62,800

Cnty Credit 5,600

State Credit 0

Munic Credit 0

Credit Status Y

Next the revised phased-in FCV's, assessments, circuit breakers, and homestead credits must be calculated for each abated year:

	1995/2000 FCV	2000/2001 FCV	2001/2002 FCV
Phased-in FCV	139,000	146,000	154,000
Phased-in Assmt	55,600	58,400	154,000
Cbkr	55,600	58,400	154,000
County Credit	0	0	3,660
State Credit	0	0	0
Munic. Credit	0	0	0

The homestead credits were calculated as follows:

Tax Year 1999/2000

Homestead Credit basis - 1998/1999 Cbkr (62,800) minus 1998/1999 credit (5,600) = 57,200

57,200 x cap (1.04) = 59,488

1999/2000 Cbkr (55,600) minus 59,488 = County Credit (-3,888) negative credits show as 0.00.

Tax Year 2000/2001

Homestead Credit basis - 1999/2000 Cbkr (55,600) minus 1999/2000 credit (0.00) = 55,600

55,600 x cap (1.04) = 57,824

2000/2001 Cbkr (58,400) minus 57,824 = County Credit (576).

Tax Year 2001/2002

Homestead Credit basis - 2000/2001 Cbkr (58,400) minus 2000/2001 credit (576) = 57,824

57,824 x cap (1.04) = 60,136 60,136 x 2.5 (adjustment for 100% assessments) = 150,340

2001/2002 Cbkr (154,000) minus 150,340 = County Credit (3,660).

The State and Municipal credits are calculated in the same fashion and in this example all result in negative values.

The revised Base and Current FCV's and the adjusted Prior Year (2001) Assmt figures can now be entered into the data system. The Current Year (2002) Assmt figures will automatically be recalculated when the account is updated. Below is the account after all adjustments:

Base FCV	Current FCV	2002 Phase-in 2	Current Year (2002) Assmt
Land 57,000	Land 65,000	Total 162,000	Total 162,000
Improvement 89,000	Improvement 105,000	Pref	Pref
Total 146,000	Total 170,000	Cbkr 162,000	Cbkr 162,000
Pref	Pref		Cnty Credit 5,647
Cbkr 146,000	Cbkr 170,000		State Credit 0
			Munic Credit 0
			Credit Status Y
			Prior Year (2001) Assmt
			Total 154,000
			Pref
			Cbkr 154,000
			Cnty Credit 3,660
			State Credit 0
			Munic. Credit 0
			Credit Status Y