The Governor of Maryland has recently signed into law HB2, which provides counties the authority to set a special property tax rate for certain vacant and abandoned properties. This statute will be effective on June 1, 2024. The purpose of the statute is encourage vacant property into usable spaces, and in particular, more housing. In effect, the statute provides that the county may enact a special tax rate on December 1 of each year for all property “cited as vacant and unfit for habitation or other authorized use on a housing or building violation notice.”

Baltimore City notoriously has a plethora of vacant and unfit housing. This statute was initially intended only for Baltimore City, but was ultimately amended to provide the same power to all counties in Maryland. Many areas of Maryland are suffering from a housing shortage, and this statute will help to address that issue.

This law will allow Maryland counties to more efficiently and quickly engage in judicial in rem foreclosure, as the value of tax liens will more rapidly exceed the value of the properties in question.

If you own real property in Maryland that is vacant, you need to be aware of this new taxing authority. If you do not improve the property, or do not otherwise provide a habitable residence in which people can live, we strongly recommend that you sell the property.

Alternatively, if you are looking to develop new property, there might now be more opportunities for you to do so. In its analysis of HB2, the Maryland Department of Legislative Services noted that there were 242,361 vacant real property accounts recorded by the State Department of Assessments and Taxation for fiscal 2024, with a total assessed value of $14.1 billion. Because of HB2, a very large portion of these properties will be sold—either by choice or by order of the court—in the coming years.

It is unclear whether every county in the State will use this new authority to tax these properties, but it is a certainty that Baltimore City will. The exact tax rates are not spelled out in the statute. Keep an eye out for new taxes, new opportunities, and new housing developments.