Maryland’s highest court has ruled that property sales occurring within several months after the date of property assessment valuation may be used in an appeal to determine the property’s assessed value. In the case, the Maryland Court of Appeals (“Court”) held in a 5-2 decision that the “date of finality” of January 1 did not bar the court’s consideration of later sales of similar properties to establish the proper assessed value for ad valorem assessment purposes.
Real property in Maryland is assessed once every three years by the State Department of Assessments and Taxation (SDAT). “In cycle” assessment notices are typically mailed to property owners in late December, with an estimate of the property’s value as of January 1—the “date of finality.” SDAT routinely ends its analysis of property sales in the late fall preceding the issuance of the new assessment notices to get assessment notices printed and issued by year end.
Prior to this decision, it was generally assumed and accepted that based on a plain reading of the controlling Maryland statute that sales of comparable properties that occurred after January 1 could not be used as a basis to establish a property’s assessed value during an assessment appeal. The majority opinion of the Court stated that “[s]ales of comparable properties occurring reasonably soon after the date of finality are relevant to an accurate assessment of the valuation of property as of that date; there is therefore no good reason why such probative evidence should not be considered.” In the case before the Court, the Montgomery County assessor successfully relied on sales that occurred in May of 2011 to defend an assessed value with a January 1, 2011 date of finality.
It will be interesting to see if the Court will reverse itself when the current “hot” real estate market eventually turns, and future post-date of value sales predominantly support a lower value than the one proposed by the assessor.