City Requires Higher Tax-data Accuracy in Real Estate Ads

www.baltimoresun.com/business/realestate/bal-md.property19may19,0,5952710.story
baltimoresun.com
City requires higher tax-data accuracy in real estate ads
By Julie Bykowicz julie.bykowicz@baltsun.com
May 19, 2009

A new Baltimore city ordinance requires the disclosure of more-accurate information about property taxes in real estate advertisements - an effort to clamp down on misleadingly low figures that can cause panic for buyers when they realize they have to pay far higher taxes than the previous owner.

The ordinance takes effect in about three months and means that ads may not state the current owner's taxes, which can include homestead credits and other tax breaks that do not transfer to the buyer. Instead, tax figures in ads must be a reflection of the property's most recent assessment multiplied by the city property tax rate of $2.268 per $100 of assessed value.

Mayor Sheila Dixon recently signed the ordinance, the council learned at a meeting Monday night.

Councilman James B. Kraft, who drafted the legislation, described the new measure as truth in advertising. "All of us around the harbor were hearing about this issue for years," he said, referring to other council members. Particularly in Canton, which is in his district, some sellers had been in their homes for 30-plus years, meaning their assessments and tax credits were not a true picture of what buyers would have to pay, Kraft said.

Kraft said he'd seen ads for properties listed at more than $1 million claim property taxes of about $7,000 when in reality the bill would be closer to $25,000. The misleading tax information was "causing all sorts of problems" when the new owner was faced with a higher assessment and none of the tax benefits.

Carolyn Cook of the Greater Baltimore Board of Realtors said her group worked with the council to develop a workable policy. At first, she said, the council asked for the ads to predict what the taxes would be the next year for a new owner - an "onerous task," she said, because houses are assessed at different times, usually once every three years.

Cook said the council decided to use the same formula used by the Metropolitan Regional Information Systems Inc., the company that runs the region's multiple-listing service.

She acknowledged that property tax promoted in some real estate ads "creates a lot of confusion among homeowners and others" because it was often pulled from the owner's last tax bill. As an example, she said, a tax bill for an abandoned home would be far lower than after it's renovated and sold - yet the figure for the shell kept popping up in ads.

"People seeing the ads weren't always making the connections," Cook said.