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Do I Owe Development Impact Taxes In Montgomery County?

Author: Peter E. Ciferri, Stephen J. Orens Date: 06/28/2019

Categories: Real Estate Law

Businessman's hand calculating invoice with house model in officeApplicants for building permits for new development in Montgomery County are generally subject to County “Impact Taxes”.  These impact taxes are for transportation and education impacts and are designed to defray the impact that new residents will have on the demand for schools and transportation infrastructure.

These impact taxes can cost tens (or even hundreds) of thousands of dollars and are assessed against the property owner at the time you obtain a building permit. However, not all applicants for a building permit are subject to this tax. In fact, many are exempt.

One important exemption is for residential development in the County. Residential developments are only subject to the tax if the proposed development increases the number of dwelling units. Therefore, if you are replacing one house with another house – You could be exempt from paying the impact tax.  Also, you should be afforded offsets for demolished existing dwellings even if you are increasing the overall total. Other exemptions apply for redevelopments, renovations, reconstructions, and nonresidential or commercial construction.

Finally, Montgomery County decision makers are re-examining the list of exemptions and a new law could be introduced as early as the Fall of 2019 to either expand or limit the imposition of impact taxes.

The real estate lawyers at McMillan Metro, P.C. have fought for residents and homebuilders on these issues before and are ready to help analyze your rights. 

If you have a question about your project, have received a notice that you owe impact taxes, or want to know whether you will be subject to impact taxes for something you have in the pipeline, please call or e-mail Peter E. Ciferri ; (240) 778-2307  or Stephen J. Orens (240) 778-2324 to schedule a consultation.