Friday, March 26, 2010

Rep. Kathy Chase Hails New Property Tax Safety Net

State Rep. Kathy Chase says too many elderly Mainers have been forced to sell their homes because of rising property taxes. A successful bill that she sponsored will enable these residents to defer tax payments until circumstances change, as long as their municipalities offer the new program.
On March 2, the Legislature unanimously approved LD 1121, An Act to Protect Elderly Residents from Losing Their Homes Due to Taxes or Foreclosure. Governor Baldacci signed it into law a few days later.
The new statute allows a municipality to establish a property tax deferral program for eligible senior citizens. In tax jurisdictions that offer the program, homeowners could apply for a deferral of their property taxes starting at age 70 if they have occupied the home for at least 10 years. They also must have a household income of less than 300 percent of the federal poverty level, which works out to approximately $30,000 for a single person and $42,000 for a couple.
“This is a long-needed safety net for fixed-income folks who face high property taxes simply because their house has appreciated in value,” said Rep. Chase (R-Wells). “These are the kind of folks who would usually sell their homes and move rather than face property tax liens. After paying taxes all those years, it is highly unfair to now tax them out of their homes.”
Under the new law, taxes would be deferred until the time that certain events occur, including the death of the homeowner or the sale of the property. At that point, the repayment of the taxes is required within a set period of time, along with payment of interest at a rate of 0.5 percent above the annually established rate for delinquent taxes. The law provides procedures for the municipality to preserve the right to enforce a lien.
“The State of Maine is not involved in this program,” Rep. Chase said. “This will be handled by communities. It will operate like a community support system and ensure that our elderly residents remain in their homes and continue to play an essential role in keeping our towns as whole communities.”
A municipality that adopts the program would send an annual notice, in lieu of a property tax bill, with an accounting of taxes deferred and interest accrued. A municipality could discontinue the program, but any taxes deferred under the program would continue to be deferred under the conditions of the program on the date it was ended.