In this state, seniors can now freeze their property taxes --- here's how | The Markets Café
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Home Finance

In this state, seniors can now freeze their property taxes — here’s how

by Press Room
August 13, 2022
in Finance
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A new property tax relief law went into effect this week in Maine, which could be a boon for seniors in the nation’s oldest state that also has the fourth-highest homeownership rate. 

Under the “Property Tax Stabilization Program,” seniors who are 65 and older and permanent residents of Maine can freeze their property taxes at the prior year’s rate if they’ve owned their home for 10 years. There is no income requirement, meaning any qualifying senior can receive the benefit. 

The benefit can even move with the seniors — they can sell their home and transfer the frozen property tax rate to their new home within Maine, even if it’s more expensive.

Read: Dream of aging in place? This government program could be a game-changer for seniors

The tax bill will freeze and not go higher as long as the senior applies by Dec. 1 each year. The tax rate could even fall and freeze at the lower rate if the annual assessment is less. 

“Ensuring that our seniors are truly able to stay in their homes in their golden years should be a priority for every legislator,” said the law’s sponsor, state senator Trey Stewart. “I put the bill out there because there are senior citizens in Maine who are struggling, who have a problem, and we can do something about it.”

Stewart, a Republican, said the idea for the tax program was suggested by a woman in Aroostook County, Maine. The tax relief program grew from that. 

According to 2020 census data, there are more than 238,000 Maine homeowners who are 65 or older. That’s nearly 18% of Maine’s population.

Maine’s program is unique and more liberal than other tax benefit programs in other states that might offer some breaks for seniors, tax experts said.

The portability of the tax freeze to other municipalities makes it uncommon, as well as the fact that the state reimburses the municipality for the reduced revenues, said Tim Vermeer, a senior state policy analyst at the Tax Foundation. “I don’t know others quite like it. It’s a unique approach,” said Vermeer, who added that other states may share aspects of the Maine law but none have all the features of the program.

The state of Maine’s general fund will reimburse municipalities for the gap between the frozen tax rate and the full cost. Maine state appropriators set aside $315,242 to launch the program for fiscal year 2023. The state estimates the cost will rise sharply as more people apply, costing $2.2 million the next year and $7 million the year after. It’s up to the state legislature to decide whether to keep funding the program beyond fiscal 2023.

Still, the Maine constitution only requires the state to reimburse towns for half of lost revenue costs, so the state could decide in the future not to fully fund the program, critics said.

Some Maine towns have raised concern that they may not have the staffing to handle an expected flood of annual applications and may not get reimbursed by the state as quickly as they would normally get tax revenue from residents. 

The Maine Municipal Association opposed the law, saying it was gambling with community tax revenues.

“Communities may have to shift burdens to younger families and businesses,” said Kate Dufour, director of advocacy and communications with the Maine Municipal Association. “If the legislature wanted to provide this benefit, they could have done that without this bill. If the state says this is getting expensive, will we have to cut services and raise taxes for everyone else?”

Stewart said the benefits of the law would outweigh those concerns.

“This is going to be a real big deal for seniors. It offers real financial stability for people. If you’re a senior citizen on a fixed income, how do you budget for tax increases each year? You can’t. This gives them the ability to plan and budget and know where their money is going,” Stewart said. “This will provide real help to the people we claim to serve.”

Applications are available here and can be filed with Maine municipalities starting Sept. 1. 

Learn how to shake up your financial routine at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab Foundation.

Read the full article here

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