[Chat] Special City tax credit--a correction

[Stephen J Gewirtz]

On your real estate tax bill, if you are eligible for the homestead tax 
credit, there will be a "SPECIAL CREDIT."  If you have looked at the Sun 
or at the City announcement of the credit (and that is what I 
essentially repeated in my earlier email about our coming real estate 
tax bills), you would think that the credit was 0.02% of your effective 
assessment.  However, that is not the case.  And it took two of us on 
the phone over an hour to figure out how the credit actually is 
calculated.  I could see that my credit was bigger than described 
earlier, but I assumed incorrectly that the City had erred on my tax bill.

I checked the City Council legislation, and the credit is a percentage 
of the assessed value of the improvements on your house, with the 
percentage to be set each year by the Board of Estimates.  This year, it 
is 0.03% of the assessed value of the improvements.  The assessment for 
land is not part of the calculation, and the amount of your homestead 
tax credit is not part of the calculation.

If you go to this website, http://sdatcert3.resiusa.org/rp_rewrite/ , 
you can look up your assessment.  It is given as an assessment for land, 
an assessment for improvements, and a total assessment.  The "SPECIAL 
CREDIT" is simply the assessment for improvements multiplied by 0.0003 
(0.03%).

For example, my assessment is land $90,000 and improvements $88,600, 
with a total of $178,600.  My State tax is 0.112% of $178,600, i.e. 
$200.03.  My City tax is 2.268% of $178,600, i.e. $4,050.65.  From 
these, the State and City homestead tax credits are subtracted (and the 
result should be that your State tax should be 10% more than last year, 
and your City tax should be 4% more than last year).  This is because 
the effective assessment (the assessment that you are actually paying 
taxes on) can go up no more than 10% for State tax purposes and 4% for 
City tax purposes.  That is the effect of the homestead tax credit.  If 
you have owned your house for a long time, your homestead tax credit 
will probably reduce your actual tax very substantially.

This year, we have the additional "SPECIAL CREDIT," which is 0.03% of 
the assessed value of the improvements on your property.  In my case, 
this number is 0.03% of $88,600, i.e. $26.58.

So what the City announced and what appeared in the Sun and what I 
repeated do not accurately describe the "SPECIAL CREDIT."  In fairness 
to the City, they announced that it would be "approximately" 0.02% of 
the total assessment.  But it is actually as I have described it.

BTW, let me remind everyone to make sure that you have filed the 
application for the homestead tax credit if you are eligible for it, 
i.e. if you own your house and it is your principal residence and if 
your spouse does not claim the credit on a different house.  This year, 
if you have gotten the homestead tax before, you will get it again.  But 
if you have not applied for the credit by the end of this calendar year, 
you will lose it and the "SPECIAL CREDIT" for next year and for 
succeeding years.  When you look up your assessment, it will say on the 
bottom of the page whether you have been approved for the homestead tax 
credit.  If you have not, go to
https://sdathtc.resiusa.org/homestead/
to file the application online.

Steve