Item 16 - Is any portion of the property used for a farming, commercial business or rental purpose; and if so, indicate the percentage of the dwelling used for the applicant's own residential purposes.

This item asks the tax credit applicant to: (1) circle an entry if the property is used for either farming, a commercial business or rental purpose; and (2) indicate what percentage of the dwelling is actually used for the residential purposes of the applicant and his/her family. If an applicant indicates that 75% or less of the dwelling is used for his/her residential purposes, then this percentage level should act as a trigger requiring the employee to ask the appropriate supervisor in the local office to see if a curtilage determination has been made by the Department's assessment personnel for the Homestead Tax Credit found at Maryland Tax-Property Annotated Code, §9-105. In cases where there is a dual use of the property and a curtilage determination has been made, then this lesser assessment is the appropriate one to be utilized for Homeowners' Tax Credit calculation purposes. It goes without saying that in the case of farms there will always be curtilage determination.

The Homeowners' Tax Credit is limited to that portion of the dwelling being utilized for residential purposes. "Dwelling house" means the principal residence of the homeowner(s) but does not include any portion of the improvement physically or structurally divided up to be used for a commercial business or income-producing purpose [COMAR 18.07.01.01B(8)]. The percentage of residential use of the dwelling supplied by the applicant also can be compared to the amount of depreciation and other expenses claimed on Schedule E of the income tax return for the business or rental use of the dwelling.

Commercial activities that are ineligible for Homeowners’ Tax Credit consideration are not always shown as dual use or "D" property (Procedure 014-040-010). For example, a residence that uses a percentage of the home for business purposes would not receive a dual designation unless the property owner significantly altered the physical character of the dwelling or homesite such as by the location of a commercial sign or construction of additional parking. An example where the assessment record would show a curtilage determination for both the Homestead and the Homeowners’ Tax Credit is a property where a bakery or doctor’s office is located on the first floor, and the applicant’s eligible residence is on the second floor.

Again, tax credit employees will be assisted in making the determination on whether an actual commercial business is being conducted by a manner in which the property is assessed by the Department’s real property assessors.