SB598 changes how certain commercial real property developed under Section 42 of the Internal Revenue Code is assessed for Maryland property tax purposes. The bill directs county supervisors of assessments to evaluate the actual or anticipated net operating income of the property, capitalized at the prevailing market rate for conventional multifamily properties in the same geographic area, and then upward-adjusted by 1.5% to 2% to account for affordability restrictions and other Section 42 encumbrances. It also continues to prohibit assessors from treating federal low-income housing tax credits themselves as income attributable to the real property.
In addition, the bill requires the Maryland Department of Housing and Community Development to notify the State Department of Assessments and Taxation within 30 days after closing and execution of the regulatory agreement when a property has been awarded a low-income housing tax credit. The act takes effect June 1, 2025, and applies to taxable years beginning after June 30, 2025.
Impact
The bill amends Section 8-105(a) of the Tax-Property Article to add a more specific valuation framework for Section 42 low-income housing tax credit properties. It affects county property tax assessments for qualifying multifamily commercial properties by requiring consideration of a standardized net operating income adjustment tied to affordability restrictions, while preserving the rule that tax credits are not counted as property income. It also creates a new administrative notification duty for DHCD to inform SDAT when a property receives a low-income housing tax credit award, improving coordination in the assessment process.
Sentiment
The voting record suggests strong bipartisan support and little opposition. The bill passed the Senate unanimously, 47-0, and passed the House by a wide margin, 121-15. With no committee transcript available, the available record indicates the measure was generally viewed favorably as a technical but important property tax and affordable housing assessment adjustment.
Contention
The main policy issue is how to value affordable housing properties that are subject to rent and use restrictions under Section 42. Supporters appear to favor a more explicit valuation method that accounts for those restrictions and provides consistency in assessments, while the bill also preserves the exclusion of tax credits from income. Any potential concern would likely come from assessors or local tax administrators over the prescribed adjustment formula and its effect on assessed values and tax revenue, but the recorded votes show no major public controversy.