County officials and North Dakota's Tax Department are preparing the debut of a tax break that will allow most property owners to subtract up to $500 from the state income tax bills they pay each year.

The tax credit, which was approved in the final days of the 2007 Legislature, will mean a smaller tax bill for most North Dakotans who pay taxes on their property and income.

"It's going to be interesting," said Les Korgel, the McLean County auditor. "We're expecting a lot of questions, at least at first. It's something new, so there will probably be a lot of confusion."

It may benefit about 8,800 North Dakotans who own property but don't make enough money to file a state income tax return, Tax Commissioner Cory Fong said.

For example, someone who is single and at least 65 years old now doesn't have to file a state tax return if he or she makes $10,050 or less annually.

"We're going to have to figure out how to get the word out to them, that they're going to have a filing requirement in order to get their property tax relief," he said.

North Dakotans who rent their homes and do not own property will not be eligible for a credit.

For most North Dakota property owners, the initiative should work like this:

Calculate 10 percent of the total on your property tax bill for 2006. Don't include special assessments, and use the consolidated property tax total, even if you got a discount by paying your bill early.

Mobile home owners, who have different property tax payment requirements, should use the amount they paid in 2007 when figuring their credit.

When you fill out your 2007 North Dakota income tax return, you'll be able to subtract the 10 percent property tax figure from what you owe in income tax.

North Dakotans whose property tax credit is larger than their income tax bill may apply for a Tax Department "property tax relief certificate." It may be redeemed at the county treasurer's office or applied to future tax bills for up to five years.

The tax credit is limited to $500 for individuals and $1,000 for couples who file a joint tax return. Property owners will be eligible for an income tax credit only if they've paid their property taxes.

"In some cases, we may be applying (the certificate) to their property tax. In some cases, we may be issuing a check back for it," said Mike Montplaisir, the Cass County auditor. "There's a lot of administrative work that the state has to do in order to make it work, but at the county level, it isn't that bad."

Most North Dakotans who own residential, agricultural or commercial property should get some benefit, Fong said. More than 333,000 people filed North Dakota state income tax returns this year.

The Tax Department plans to begin an information campaign soon about the program, Fong said. Brochures describing it have been prepared for county offices, and for envelope stuffing when most counties mail their property tax statements.

The department's Web site includes summaries, a chart detailing how the credit affects residential, agricultural and commercial property, and a list of answers to frequently asked questions. Many of the questions were posed by tax preparers who are curious about the program's administration, Fong said.

County auditors and treasurers will be able to log onto the Tax Department's Web site to determine whether a property tax relief certificate is valid and request reimbursement for it. Fong said setting up a system to handle the certificates was one of the agency's biggest administrative chores.

"The certificate itself, having to work with counties, and obviously the magnitude of this have been challenges," Fong said. "We're talking about a lot of taxpayers who are going to be affected by this."