Many counties in Maryland recently changed their treatment of the Homestead Tax Credit when an estate is the seller. This new Recapture Tax comes as an unwelcome surprise to listing agents and personal representatives because it can drastically reduce seller net proceeds.
First, let’s talk about the Homestead Tax Credit (HTC). The HTC shields homeowners from drastic tax increases. The credit is reserved only for a principal residence. A homeowner is eligible to apply after they lived in the property for one year.