The new application requirements
for continued Homestead eligibility have made it necessary to change the method
cooperative corporations are maintained in our data
system. Each dwelling unit in the
cooperative must now have an individual account set up so that individual share
holder application information, occupancy status, credit amount and transfer
information may be maintained. The conversion to individual accounts should be
done in the cooperatives normal reassessment cycle. The following guidelines
should be followed to establish the individual accounts:
1. Create
an account in the mainframe for each unit or dwelling in the cooperative.
2. The owners name and mailing address for each new account will
be that of the cooperative, not the individual share holders.
3. The
premise address and legal description should reflect the individual unit.
4. The
owner occupancy status should be entered for each new account. Enter the actual occupancy
information for each share holder if it is known, or “H” if the entire parent
account was labeled owner occupied.
5. A BPRUC of “00070” should be entered. This code will identify
cooperative corporations.
6. The accounts are then downloaded to CAMA where base and
current full cash values should be determined for each new account. The sum of
the base full cash values for the new accounts should equal the corresponding
base full cash value from the parent account.
7. The accounts are then uploaded to the mainframe for regular
triennial reassessment. If the parent account for the cooperative had been
receiving a Homestead credit, the prior tax year phase-in values and credits
must be entered into the mainframe for proper calculation of the following tax
year’s credit. The credit amount for the individual units should be allocated
from the parent at a ratio equivalent to the contribution of the individual
unit, for example:
If the parent
account was comprised of 50 units, had a current full cash value of 12,500,000, a
07/08 Homestead credit of 3,750,000, and the full cash value attributed to one of the new units was 237,000, then the 07/08
Homestead credit attributed for this single
unit would be 71,100 i.e. 237,000 divided by 12,500,000 = .01896 then multiplied by
3,750,000 = 71,100.
8. The Homestead eligibility section will have to be contacted
to enter a “G” or grandfathered in homestead eligibility code on the owner
occupied accounts.
9. The newly established accounts will receive a bulk
reassessment notice containing a Homestead credit eligibility application.
The Dept. has promulgated
proposed regulations with COMAR Title 18 Subtitle 07 Chapter 03 requiring cooperatives to furnish local
assessment offices with ownership and transfer information as membership
transfer. A form has been drafted
(attachment 1) that must be completed by the cooperative within 60 days of the
transfer and filed with the local assessment office. As offices receive sale information a
transfer should be keyed on the individual account. This will set in motion the
normal events that occur in the typical dwelling transfer. The Homestead credit will be denied for the
next tax year and an eligibility application will be sent to the cooperative
for that account for the new member to complete. Because the new member in the
cooperative is a share holder and not the owner of record (the owner of each
unit is the cooperative corporation), the following exceptions must be followed
when keying the transfer:
1. The new owner is still the cooperative, not the member or share holder.
2. The Dept. only has the
authority to require information needed to maintain the Homestead credit. That’s why the transfer questionnaire states
that providing the consideration is optional. If it is provided it cannot be
made public, it’s similar to purchasing shares of stock in a corporation.
Therefore when keying the transfer if the consideration is greater than zero,
$10.00 should be entered as the consideration even if the actual amount is
known. This will disqualify the credit for the new member and generate an
eligibility application. If the actual consideration is provided, it can be
recorded in the non-public remarks area of CAMA.
3. The
deed reference should be left blank.
4. The
conveyance code should be “9” for non-arms length.
As Homestead
applications are received, the share holders name will be recorded in the
homestead database. In the future real property will have inquiry rights to
view this information.
These changes may
have a burdensome impact on the accounting policies of the cooperative. Each cooperative
should be contacted and a meeting scheduled well in advance to make the
cooperative aware of the upcoming changes.
Attachment: 1
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