The Homestead Tax Credit Ploy
At the meeting of Salisbury’s City Council on May 29 we once again heard Don Cathcart (Lynn’s husband) argue that homeowners should accept and fund the Mayor’s proposed budget “by means of a double-digit tax increase“ because of the so-called homestead tax credit. That device protects a resident from paying higher property tax on his/her home as a result of increase in its tax value (assessment) after he/she has purchased the home. The actual tax imposed by the City of
Mr. Cathcart does not appreciate that this “tax credit” affords no protection from the proposed and past increases in the City’s tax rate, which cause all property owners, including homeowners, to pay additional taxes. And he completely disregards the fact that the “credit†cannot be transferred with the ownership of someone’s home. When a residence is sold, the protection against prior increase in its assessed value ends and the new owner initially pays taxes based on the current assessed value.
Thus, if you sell your home (or, after you die, it passes to your children) its tax value is “updated” to the present. Therefore, a prospective buyer will make his/her best offer in light of the full value assessment, not the former (lesser) tax value. And that’s also the case for someone who buys a new home he/she will pay taxes on the basis of its current tax value assessment
Not surprisingly, prospective home buyers are concerned by the fact that
Here’s an analogy: imagine the effect on sales if the fuel consumption rate of one particular make of car or truck were increasing to the same extent as Salisbury’s tax rate (over 25% in 5 years even if Mr. Comegys) compromise of a 9 cent tax rate increase were adopted this year. Under that analogy
The City’s goal of more homeownership and its strategy to increase the tax base by subsidizing developers and new development will both be jeopardized. In addition the current residents will be harmed by the higher taxes in both the short term and also when they (or their heirs) sell their home, not to mention tenants who will pay more rent to cover the tax increases.
Mr. Cathcart must have forgotten that fact about which the master politician of our time once reminded himself: the economy, stupid.”
This post was authored by one of “Delmarva Dealings” loyal readers.
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Comments
For a math prof, Cathcart seems strangely confused about a simple equation:
Assessment times Tax Rate equals Tax Bill, or:
A x TR = TB
Egro, if the tax rate goes up by 17 percent, so does the tax bill, even if the assessmant remains unchanged.
Then, when a homeowner sells, the assessment goes up to the full amount, so that the buyer gets a much larger tax bill, and for that reason prospective purchasers look — and often purchase — elsewhere to avoid the “double whammy” of Salisbury city taxes.
That’s already happening, and any higher tax rate will make it worse for anyone selling a home in Salisbury and those who are not will still have a larger tax bill because of the rate increase.
Right on the nose First Timer.
His .25 cents a day equation was a hoot. Sure I can afford .25 cents a day as well, but for some that might be a week’s groceries, or a medication they need and can’t afford. People like him don’t even know how many poor people really exist here, they are both out of touch with reality, just like the Mare, Bubba, Lousie and Shannie. There is no compassion in numbers
Selling a house is a challenge now before the tax hikes even plays a role. If that gets past there will be more foreclosures and a tougher market to sell anything.
I know that during presidential election years people sit on their money like an egg, so I don’t look for things to change in the housing market for a few more years. There are enough empty ones around, why build more?
Wicomico County’s tax revenue cap (like it or not) has caused that tax rate to decline, so Salisbury really looks bad by comparison.
And anyone who is attracted by the County situation will be turned off by the situation in Salisbury, with a predictable outcome.
I left myself hanging up there about the .25 cent a day tax increase by Cathcart, I own a small property as he does so ours maybe lower than most.
My point was that .25 a day comes to $91.25 a year. That being a weeks groceries or at least one prescription somebody may need. To some that $91 may be an essential item they must cut from their budget.
We all know the Cathcart’s are moving anyway, they can really care less. Lynn let the mayor call her shots for her during her term on council, I guess she wants the rest of Salisbury to live under this oppression.