In the city of Baltimore, the consequences of a missed property tax bill can ripple through families and communities. The Baltimore Banner has published an investigation of this system, showing how it forces low-income homeowners to pay thousands of dollars in owed taxes, interest and fees to lien holders — or face the loss of their homes. This in turn contributes to prolonged vacancy in disinvested areas of the city. The Banner has also published an illustrated guide and list of resources.
Here are some key takeaways from The Banner’s reporting:
Tax liens have been sold on tens of thousands of homes
Some 41,000 properties (mostly residential) have gone through the tax sale since 2016, according to a Banner analysis of Maryland Department of Assessments and Taxation (SDAT) data and property tax liens from the Baltimore City Department of Finance.
A big loss over very little money
A property can land on the tax sale list for one missed payment and as little as $750 in owed property taxes for a property identified by the city as owner-occupied, and $250 for one identified as non-owner-occupied.
Black neighborhoods hit hardest
Homes land in tax sale at much higher rates in the city’s majority-Black census tracts. In Southwest Baltimore, 46% of all buildings have gone into tax sale since 2016. In Sandtown-Winchester, 42% of all buildings have done so. Each and every one of the 1,763 homes across Baltimore that The Banner identified as having changed hands through the tax sale since 2016 was located in a majority-Black neighborhood.
Costly for homeowners but lucrative for lien holders
Between flipping houses acquired at tax sale and collecting interest on outstanding tax liens, investors have made tens of millions of dollars from Baltimore’s tax sale system since 2016.
Clerical errors with big consequences
The process is slightly more lenient for owners of properties classified as owner-occupied. For their homes to enter into tax sale, they must be delinquent by at least $750 rather than $250. They pay a lower interest rate to redeem their property and have a few extra few months to do so before the lienholder can foreclose.
And they can access tax credits more easily to keep their homes out of tax sale in the first place. But thousands of homeowners may currently be misclassified. The Banner identified roughly 10,000 homes liened since 2016 in which the address of the property owner, according to state records, matched that of the liened property. But the majority of those homes — 6,313 — were classified by the state as non-owner-occupied, while just 3,895 of those homes were listed as owner-occupied.
Lawmakers seeking reforms to system
Amid the pandemic and as Baltimore Mayor Brandon Scott’s administration launched a renewed push to tackle vacant housing, the tax sale system has come under increasing scrutiny and undergone some reforms. Attempts to scrap the system or remove private investors entirely, as some advocates have suggested, remain unpopular.
But as state lawmakers this session consider a series of bills aimed at making the system fairer, advocates are hopeful that meaningful reforms will be implemented.
