| Category: | Tax Credits | | Category No.: | 012 | | Subject: | Homestead Credit | | Subject No.: | 150 | | Topic: | Disqualification | | Topic No.: | 31 | | Date Issued: | 5/21/1999 | | Revision Date: | 9/9/2010 | Tax-Property Annotated Code §9-105 states that the taxable assessment for the preceding tax year will be the basis for the current tax year, after adjusting for any valuation of new construction greater than $100,000, unless during the previous tax year:
- the property was transferred for consideration to new ownership;
- rezoned at the request of the owner;
- the use of the dwelling was changed substantially; or
- the assessment was clearly erroneous due to an error in calculation or measurement.
For the majority of data processing and value changes, the data system will automatically disqualify ineligible properties. For example the system recognizes a transfer for consideration to new ownership and the keying of the transfer disqualifies the property for the next tax year. Homestead credit adjustments because of new construction additions over $100,000 are also done automatically. However, changes two through four listed above are not automatically disqualified.
For example, the property below is "D", or dual use account. The date is October, 2003. A portion of the improvement is the homeowners residence and the remainder is used as a doctors office (4% homestead cap):
| Base FCV |
Current FCV |
2004 Phase-in 1 |
Current Year (2004) Assmt |
|---|
| Land 75,000 |
Land 90,000 |
Total 315,000 |
Total 315,000 |
| Improvement 225,000 |
Improvement 255,000 |
Pref |
Pref |
| Total 300,000 |
Total 345,000 |
Cbkr 265,000 |
Cbkr 265,000 |
| Pref |
Pref |
|
Cnty Credit 26,000 |
| Cbkr 250,000 |
Cbkr 295,000 |
|
State Credit 0 |
| |
|
|
Munic Credit 0 |
| |
|
|
Credit Status Y |
| |
| |
Prior Year (2003) Assmt |
|---|
| Total 300,000 |
| Pref |
| Cbkr 250,000 |
| Cnty Credit 11,000 |
| State Credit 0 |
| Munic. Credit 0 |
| Credit Status Y |
SDAT becomes aware that the dual use has ceased and the entire property is now being used as a residence. For the upcoming July 1, the property will be changed to an "H" account and the circuit breaker figures will be changed to equal the total values, see below:
| Base FCV |
Current FCV |
2004 Phase-in 1 |
Current Year (2004) Assmt |
|---|
| Land 75,000 |
Land 90,000 |
Total 315,000 |
Total 315,000 |
| Improvement 225,000 |
Improvement 255,000 |
Pref |
Pref |
| Total 300,000 |
Total 345,000 |
Cbkr 315,000 |
Cbkr 315,000 |
| Pref |
Pref |
|
Cnty Credit 66,440 |
| Cbkr 300,000 |
Cbkr 345,000 |
|
State Credit 40,000 |
| |
|
|
Munic Credit 0 |
| |
|
|
Credit Status Y |
| |
| |
Prior Year (2003) Assmt |
|---|
| Total 300,000 |
| Pref |
| Cbkr 250,000 |
| Cnty Credit 11,000 |
| State Credit 0 |
| Munic. Credit 0 |
| Credit Status Y |
Note that the Current Year Assmt figures changed because the Base and Current FCV's were updated. The Prior Year Assmt figures did not change. Therefore, the system calculated the Current Year homestead credit as follows:
County Credit
250,000 - 11,000 = 239,000 x 1.04 (4% cap)= 248,560 315,000 - 248,560= 66,440
State Credit
250,000 0 = 250,000 x 1.10 (10% cap) = 275,000 315,000 - 275,000 = 40,000
The change in this property from doctors office to all residence should be considered a change in use (the property changed from part commercial use to all residential use). Therefore it should be disqualified from receiving the homestead credit for the current year. This must be done manually through on-line data entry (an "X" should be entered in the credit status field on the F16 "Billing Data" screen). Below are the results:
| Base FCV |
Current FCV |
2004 Phase-in 1 |
Current Year (2004) Assmt |
|---|
| Land 75,000 |
Land 90,000 |
Total 315,000 |
Total 315,000 |
| Improvement 225,000 |
Improvement 255,000 |
Pref |
Pref |
| Total 300,000 |
Total 345,000 |
Cbkr 315,000 |
Cbkr 315,000 |
| Pref |
Pref |
|
Cnty Credit 0 |
| Cbkr 300,000 |
Cbkr 345,000 |
|
State Credit 0 |
| |
|
|
Munic Credit 0 |
| |
|
|
Credit Status X |
| |
| |
Prior Year (2003) Assmt |
|---|
| Total 300,000 |
| Pref |
| Cbkr 300,000 |
| Cnty Credit 11,000 |
| State Credit 0 |
| Munic. Credit 0 |
| Credit Status Y |
Note that the Current Year figures now have no County and State credit, and the Credit Status field has an "X" that identifies it as disqualified.
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