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SB 822

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2025 Regular Session Introduced by Schuyler VanValkenburg

SB 822 creates a state/local property tax credit to cap nonprimary residence taxes at up to 15% of prior-year assessment, easing bills for eligible homeowners.

Acts of Assembly Chapter text (CHAP0489)
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Bill Summary · SB 822

SB 822 — Property Tax: Tax Credit for Nonprimary Residence (summary)

Status: Hearing scheduled 3/04 at 1:00 p.m.
Introduced: early 2025 (effective provisions: June 1, 2025; applies to taxable years beginning after June 30, 2025)

Purpose / Intent

SB 822 creates a statewide property tax credit for a homeowner’s nonprimary residence (commonly a second or vacation home) to limit the tax impact from large year‑to‑year assessment increases. The measure extends an assessment‑cap style protection (similar in concept to Maryland’s homestead cap) to certain nonprimary residences, while preserving jurisdiction for counties and municipalities to set local limits.

Key provisions

  • Definitions
    • “Nonprimary residence”: a house (including a condo or cooperative unit) that is not the homeowner’s principal residence and that the homeowner occupies, or expects to occupy, fewer than 6 months in a 12‑month period. Properties held primarily for rental, investment or income generation are excluded.
    • “Homeowner” and “legal interest” are defined broadly to cover common ownership arrangements (sole owner, joint tenant, tenants in common, life estate, qualifying trust, cooperative membership, etc.).
  • Credit mechanics
    • For any taxable year with an increase in assessment, the State and each county/municipal government must grant a property tax credit for that nonprimary residence unless statutory disqualifiers apply (transfer of ownership, zoning‑initiated value increase, substantial change of use, or clearly erroneous assessment).
    • Assessment cap (nonprimary residence credit percentage): the State cap is set at 15% for State property tax purposes; local governments may adopt a lower cap.
    • Credit calculation (summary): multiply prior year taxable assessment by the applicable cap percentage; subtract that amount from the current year assessment; if positive, multiply the difference by the current year tax rate to compute the credit.
  • Eligibility & administration
    • A homeowner must actually reside in the nonprimary residence by July 1 of the taxable year to qualify.
    • Only one nonprimary residence per homeowner may receive the credit.
    • Homeowners (or agricultural ownership entities where applicable) apply to the State Department of Assessments and Taxation (SDAT); SDAT administers eligibility and applications.
    • Mixed‑use properties must have assessments apportioned between residential and nonresidential uses.
    • Credits of less than $1 are not granted.
    • Special filing/transfer rules apply where deeds are recorded in specified time windows.
  • Effective date: takes effect June 1, 2025 and applies to taxable years beginning after June 30, 2025 (per bill language).

Who is affected

  • Primary beneficiaries: homeowners who own and occupy a nonprimary residence (second/vacation home) for fewer than six months per year and who are not using the property primarily to generate rental/income.
  • State fiscal accounts: the Annuity Bond Fund (ABF) — source of debt service on State general obligation bonds — would see reduced revenues.
  • Local governments (counties/municipalities): decreased property tax revenues to the extent they grant the credit; they may set their own (lower) cap and will incur some administrative costs (with county reimbursements for State admin costs contemplated).
  • SDAT: administrative workload to process applications and verify eligibility.

Fiscal impact (highlights from fiscal analysis)

  • Potentially significant revenue reductions for State and local governments beginning FY2026, depending on uptake:
    • More than 40,000 property accounts were identified as potentially eligible (total potential assessment loss estimated at ~$578.7 million).
    • Under sample assumptions, State ABF revenues could fall by about $165,000 annually (if 25% of identified accounts claim the credit); could reach $325,000 annually at 50% uptake.
    • Local property tax revenues could decline (example estimate: ~$1.8 million annually under one scenario).
    • The State may need to raise the State property tax rate or use general fund appropriations to cover GO bond debt service shortfalls; estimated general fund expenditures increases of ~$588,100 in FY2026 and ~$400,200 in FY2030.
  • Counties will incur additional administrative costs; special fund revenues may increase to the extent counties reimburse the State for administration.

Procedural / timeline notes

  • Applications for the credit are handled by SDAT; homeowners must meet residency and filing deadlines specified in the bill.
  • Only one nonprimary residence per homeowner is eligible each year.
  • The bill sets an effective date (June 1, 2025) and specifies applicability for taxable years beginning after June 30, 2025.

Practical effect

If enacted, SB 822 reduces the tax shock for certain second‑home owners when market assessments jump year‑to‑year by capping the portion of the assessment that can be taxed in a single year (state cap default 15%), shifting some tax burden or revenue timing onto the government(s) (and ultimately other taxpayers unless offsets are identified). The program will require SDAT administration and will reduce revenues available for debt service and local government budgets to the extent homeowners claim the credit.

Compiled from official sources — confirm details with the bill’s official record.

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