|On March 28, 2016, staff received the attached Request for Verification of Exemption Information for Use on the 2016 Notices of Appraised Value and 2016 Assessment Rolls. The purpose of the form is to notify Montgomery Central Appraisal District (MCAD) of any changes to the optional Homestead, Over-65, and Disability tax exemptions currently granted by the Township.
Optional Homestead Exemption
A taxing unit may offer a residential homestead exemption for up to 20% of a qualified home’s value. However, the amount of an optional exemption cannot be less than $5,000, regardless of the percentage amount. The Township does not currently offer an optional homestead exemption.
A taxing unit may offer an over-65 exemption in any dollar amount it chooses. The Township currently offers a $25,000 exemption.
A taxing unit may offer a disability exemption in any dollar amount it chooses. The Township currently offers a $25,000 exemption.
Although MCAD’s form indicates an April 15, 2016 deadline for the over-65 and disability exemptions, and a July 1, 2016 deadline for the homestead exemption, the majority of taxing entities do not submit the verification form to MCAD until after April 15th but prior to the legally required July 1st date. This is because most taxing entities prefer to have the preliminary tax roll information distributed annually by MCAD in May prior to making any decisions regarding tax exemptions in order to be working with the most current data available. The only consequence of not submitting the verification form by April 15th is that changes to exemption amounts, if subsequently approved by the Board, will not be reflected in the preliminary Notice of Appraised Value documents that are mailed to property owners and taxing entities in May. However, any changes in exemptions submitted to MCAD by July 1st will be included in the current tax year’s tax rolls and tax statements that are distributed in August and October, respectively.
If the Board wishes to consider changes to the Township’s existing tax exemptions that would be effective for the 2016 tax year (2017 budget year), the Board should direct staff to place this subject on the May 19, 2016 agenda in order to allow sufficient time for analysis and consideration prior to the July 1, 2016 legal deadline to submit such changes to MCAD. However, please be aware that such action would result in the Board making decisions regarding potentially significant decreases in property tax revenue outside of the budget process.
Therefore, staff recommends that if the Board wishes to consider changes to the Township’s existing tax exemptions, this matter be deferred until the upcoming budget process in mid-August. This would allow the financial impact of such changes to be analyzed in conjunction with other possible budget priorities such as lowering the tax rate, retiring debt, establishing reserves for future incorporation, and/or any other budget initiatives desired by the Board. If the Board determines during the budget process that changes to the Township’s tax exemptions are a budget priority, the subject would be brought back to the Board for formal action during the first quarter of 2017 and, if approved, become effective with the 2017 tax year (2018 budget year).