County introduces tax credit for residential portions of mixed-use properties

Maryland's House Bill 23 is making waves as it proposes a significant tax credit aimed at easing the financial burden on mixed-use properties. Introduced on March 10, 2025, the bill seeks to exempt the residential portions of these properties from a special tax rate, a move that could reshape the landscape of property taxation in the state.

At the heart of House Bill 23 is a straightforward yet impactful provision: counties will be able to calculate a tax credit based on either the square footage or the income generated from the residential segment of mixed-use properties. This means that as long as the special rate is in effect, property owners will benefit from a reduction in their tax liabilities, provided their residential areas are properly identified.

The bill's automatic credit granting mechanism is particularly noteworthy. Counties will not require property owners to apply for this credit; instead, they can use publicly available records to identify eligible properties and calculate the credit due. This streamlined approach aims to reduce bureaucratic hurdles and ensure that property owners receive the financial relief intended by the legislation.

However, the bill is not without its challenges. Some stakeholders have raised concerns about the potential for miscalculation or the adequacy of publicly available records. If a county cannot determine the credit due due to insufficient information, it may request additional data from property owners. Failure to comply could result in the loss of the credit, raising questions about the balance of responsibility between the government and property owners.

The implications of House Bill 23 extend beyond mere tax relief. By incentivizing the residential use of mixed-use properties, the bill could encourage more diverse urban development, potentially leading to increased housing availability in densely populated areas. Experts suggest that this could also stimulate local economies by attracting more residents to mixed-use developments, thereby boosting retail and service sectors.

As the bill progresses through the legislative process, its supporters argue that it represents a crucial step toward more equitable taxation practices, while opponents caution about the administrative challenges it may pose. The outcome of House Bill 23 could set a precedent for how mixed-use properties are taxed in Maryland, making it a pivotal moment for property owners and local governments alike.