Association for Public Policy Analysis & Management

Growing property tax bills are a challenge for homeowners, particularly elderly homeowners reliant on a fixed income. We evaluate the impact of a new property tax credit program targeted at seniors on sales of eligible properties in Montgomery County, Maryland. We separately assess the credit’s impact on sales using difference-in-differences, border discontinuity, and regression discontinuity identification strategies. The empirical results suggest the credit had no impact on arm’s length residential sales among eligible homeowners, which increased following the introduction of the credit. However, the introduction of the credit corresponded to a decline in non-arm’s length sales, which include tax lien sales and foreclosures, among eligible homeowners. The results suggest that Maryland’s targeted property tax relief program did not disturb the relocation decisions of elderly homeowners, and may have reduced the incidence of distressed sales.