MD
Maryland House Bill HB585

Maryland 2025 Regular Session

Maryland House Bill HB585 Compare Versions

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1- WES MOORE, Governor Ch. 67
21
3-– 1 –
4-Chapter 67
5-(House Bill 585)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *hb0585*
89
9-Property Tax – Low–Income Housing Tax Credit – Valuation of Property
10+HOUSE BILL 585
11+Q1 5lr2177
12+ CF SB 598
13+By: Delegate Palakovich Carr
14+Introduced and read first time: January 23, 2025
15+Assigned to: Ways and Means
16+Committee Report: Favorable with amendments
17+House action: Adopted
18+Read second time: February 26, 2025
1019
11-FOR the purpose of requiring the supervisor of assessments for a county to evaluate a
12-certain net operating income calculation when determining the value of commercial
13-real property that is developed under a certain provision of federal law Department
14-of Housing and Community Development to notify the State Depart ment of
15-Assessments and Taxation that a commercial property that is developed under a
16-certain provision of federal law has been awarded a low–income housing tax credit;
17-and generally relating to low–income housing.
20+CHAPTER ______
1821
19-BY repealing and reenacting, with amendments,
20- Article – Tax – Property
21-Section 8–105(a)
22- Annotated Code of Maryland
23- (2019 Replacement Volume and 2024 Supplement)
22+AN ACT concerning 1
2423
25- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
26-That the Laws of Maryland read as follows:
24+Property Tax – Low–Income Housing Tax Credit – Valuation of Property 2
2725
28-Article – Tax – Property
26+FOR the purpose of requiring the supervisor of assessments for a county to evaluate a 3
27+certain net operating income calculation when determining the value of commercial 4
28+real property that is developed under a certain provision of federal law Department 5
29+of Housing and Community Development to notify the State Department of 6
30+Assessments and Taxation that a commercial property that is developed under a 7
31+certain provision of federal law has been awarded a low–income housing tax credit; 8
32+and generally relating to low–income housing. 9
2933
30-8–105.
34+BY repealing and reenacting, with amendments, 10
35+ Article – Tax – Property 11
36+Section 8–105(a) 12
37+ Annotated Code of Maryland 13
38+ (2019 Replacement Volume and 2024 Supplement) 14
3139
32- (a) (1) Except for land that is actively devoted to farm or agricultural use, the
33-supervisor:
40+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
41+That the Laws of Maryland read as follows: 16
3442
35- (i) may value income producing real property by using the
36-capitalization of income method or any other appropriate method of valuing the real
37-property; and
43+Article – Tax – Property 17
3844
39- (ii) shall consider an income method in valuing income producing
40-commercial real property.
45+8–105. 18
4146
42- (2) For income producing single–family residential real property, the
43-supervisor may value the property by using the same methods that are us ed for
44-single–family residential real property that is owner–occupied.
47+ (a) (1) Except for land that is actively devoted to farm or agricultural use, the 19
48+supervisor: 20 2 HOUSE BILL 585
4549
46- (3) (I) In determining the value of commercial real property developed
47-under § 42 of the Internal Revenue Code, the supervisor SHALL EVALUATE EACH OF THE
48-FOLLOWING : Ch. 67 2025 LAWS OF MARYLAND
4950
50-– 2 –
5151
52- [(i)] 1. [shall consider] the impact of applicable rent restrictions,
53-affordability requirements, or any other related restrictions required by § 42 of the Internal
54-Revenue Code and any other federal, State, or local programs;
52+ (i) may value income producing real property by using the 1
53+capitalization of income method or any other appropriate method of valuing the real 2
54+property; and 3
5555
56- [(ii)] 2. [may not consider income tax credits under § 42 of the
57-Internal Revenue Code as income attributable to the real property; and
56+ (ii) shall consider an income method in valuing income producing 4
57+commercial real property. 5
5858
59- (iii) 3. may consider] the replacement cost approach only if the
60-value produced by the replacement cost approach is less than the value produced by the
61-income approach for the property and it is reflective of the value of the real property; AND
59+ (2) For income producing single–family residential real property, the 6
60+supervisor may value the property by using the same methods that are used for 7
61+single–family residential real property that is owner–occupied. 8
6262
63- 3. THE ACTUAL OR ANTICI PATED NET OPERATING
64-INCOME ATTRIBUTABLE TO THE REAL PROPERTY , CAPITALIZED AT THE P REVAILING
65-MARKET RATE FOR CONV ENTIONAL MULTIFAMILY PROPERTIES IN THE SA ME
66-GEOGRAPHIC AREA , UPWARD ADJUSTED BETW EEN 1.5% AND 2% TO ACCOUNT FOR
67-AFFORDABILITY RESTRI CTIONS AND OTHER ENCUMBRANCES REQUIRE D UNDER §
68-42 OF THE INTERNAL REVENUE CODE.
63+ (3) (I) In determining the value of commercial real property developed 9
64+under § 42 of the Internal Revenue Code, the supervisor SHALL EVALUATE EACH OF THE 10
65+FOLLOWING : 11
6966
70- (II) IN DETERMINING THE VA LUE OF COMMERCIAL RE AL
71-PROPERTY DEVELOPED U NDER § 42 OF THE INTERNAL REVENUE CODE, THE
72-SUPERVISOR MAY NOT C ONSIDER INCOME TAX C REDITS UNDER § 42 OF THE
73-INTERNAL REVENUE CODE AS INCOME ATTRIB UTABLE TO THE REAL P ROPERTY.
67+ [(i)] 1. [shall consider] the impact of applicable rent restrictions, 12
68+affordability requirements, or any other related restrictions required by § 42 of the Internal 13
69+Revenue Code and any other federal, State, or local programs; 14
7470
75- (II) WITHIN 30 DAYS OF CLOSING AND THE EXECUTION AND
76-DELIVERY OF THE REGU LATORY AGREEMENT GOV ERNING A LOW–INCOME HOUSING
77-TAX CREDIT FOR COMME RCIAL REAL PROPERTY DEVELOPED UNDER § 42 OF THE
78-INTERNAL REVENUE CODE, THE DEPARTMENT OF HOUSING AND COMMUNITY
79-DEVELOPMENT SHALL NOT IFY THE DEPARTMENT THAT A PRO PERTY HAS BEEN
80-AWARDED THE LOW –INCOME HOUSING TAX C REDIT.
71+ [(ii)] 2. [may not consider income tax credits under § 42 of the 15
72+Internal Revenue Code as income attributable to the real property; and 16
8173
82- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect June
83-1, 2025, and shall be applicable to all taxable years beginning after June 30, 2025.
74+ (iii) 3. may consider] the replacement cost approach only if the 17
75+value produced by the replacement cost approach is less than the value produced by the 18
76+income approach for the property and it is reflective of the value of the real property; AND 19
8477
85-Approved by the Governor, April 8, 2025.
78+ 3. THE ACTUAL OR ANTICI PATED NET OPERATING 20
79+INCOME ATTRIBUTABLE TO THE REAL PROPERTY , CAPITALIZED AT THE P REVAILING 21
80+MARKET RATE FOR CONV ENTIONAL MULTIFAMILY PROPERTIES IN THE SA ME 22
81+GEOGRAPHIC AREA , UPWARD ADJUSTED BETW EEN 1.5% AND 2% TO ACCOUNT FOR 23
82+AFFORDABILITY RESTRI CTIONS AND OTHER ENCUMBRANCES REQUIRE D UNDER § 24
83+42 OF THE INTERNAL REVENUE CODE. 25
84+
85+ (II) IN DETERMINING THE VA LUE OF COMMERCIAL RE AL 26
86+PROPERTY DEVELOPED U NDER § 42 OF THE INTERNAL REVENUE CODE, THE 27
87+SUPERVISOR MAY NOT C ONSIDER INCOME TAX C REDITS UNDER § 42 OF THE 28
88+INTERNAL REVENUE CODE AS INCOME ATTRIB UTABLE TO THE REAL P ROPERTY. 29
89+
90+ (II) WITHIN 30 DAYS OF CLOSING AND THE EXECUTION AND 30
91+DELIVERY OF THE REGU LATORY AGREEMENT GOV ERNING A LOW–INCOME HOUSING 31
92+TAX CREDIT FOR COMME RCIAL REAL PROPERTY DEVELOPED UNDER § 42 OF THE 32
93+INTERNAL REVENUE CODE, THE DEPARTMENT OF HOUSING AND COMMUNITY 33
94+DEVELOPMENT SHALL NOT IFY THE DEPARTMENT THAT A PRO PERTY HAS BEEN 34
95+AWARDED THE LOW –INCOME HOUSING TAX C REDIT. 35 HOUSE BILL 585 3
96+
97+
98+
99+ SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect June 1
100+1, 2025, and shall be applicable to all taxable years beginning after June 30, 2025. 2
101+
102+
103+
104+
105+Approved:
106+________________________________________________________________________________
107+ Governor.
108+________________________________________________________________________________
109+ Speaker of the House of Delegates.
110+________________________________________________________________________________
111+ President of the Senate.