New state property tax loans can help seniors age in place

Maine’s new property tax deferral program for seniors launched Jan. 5. The program is designed to help people over 65 or with permanent disabilities stay in their homes by providing lifelong loans to cover the cost of municipal property taxes. Loans can be deferred for the lifetime of the owner and repaid from the owner’s estate.

The program is the result of legislation signed into law by Governor Janet Mills on July 19, 2021. The primary sponsor of the bill was Senator Donna Bailey, D-Saco. The bill was modeled after a similar 1989 program that was suspended during the 1991 recession.

In a press release from her office, Governor Mills said, “Maine’s seniors and people with disabilities deserve to live and grow old in the comfort of their homes without fear of losing them because they cannot afford property taxes.

Property taxes can be one of the biggest annual bills Maine residents face. The most recent comparison available from the Maine Tax Department using figures from the 2019 Municipal Commitment and 2021 State Assessment places Lincoln County’s average equalized tax rate at 10.36, i.e. $1,036 for $100,000 of evaluation.

Based on this rate, a home in Lincoln County worth $200,000 would owe an average of $2,072 in property taxes.

Property taxes are set by cities based on their individual funding needs and fluctuate each year. In 2021, tax rates ranged from 4.025 in South Bristol to 20.1 in Somerville.

Many Lincoln County seniors on fixed incomes still live in inherited family homes with properties that may be significantly higher in value. Some face property tax bills of $5,000 or more per year.

According to the Social Security Administration’s Old Age, Survivors, and Disability Insurance Program, as of December 2020, there were 9,375 Social Security beneficiaries over the age of 65 in Lincoln County, receiving an average of $1,483.

Given an extrapolated annual income of $17,796, property taxes could easily account for more than a quarter of some retirees’ annual income.

One of the main advantages of the state property tax deferral program is that it does not negatively impact local municipal taxes. Essential taxes that help fund schools, roads and infrastructure are always paid in full on time.

But the program could preserve significant funds for a low-income senior – potentially improving their chances of aging in place, a common goal for many elderly Maine residents.

In the press release, Kirsten Figueroa, Commissioner of the Department of Administrative and Financial Services, said the program “(allows) people to stay in their homes without hampering local budgets.”

Eligibility for the program is limited to owner-occupied primary residences with owners age 65 or older and/or permanently disabled, earning less than $40,000 per year, with liquid assets of less than $50,000 (or less than $75,000 in the case of a joint application). Additionally, there can be no limitations on the owner’s ability to sell the property or take out loans, and a homestead exemption must be in place.

Homestead exemptions are reductions of up to $25,000 in the value of a home for property tax purposes. They can be requested through the municipality where accommodation is located. The homestead exemption can apply to any residential land or building, including mobile homes, that has been the owner’s permanent residence for at least 12 months.

According to the details of the state’s property tax deferral program, property eligible for deferral includes both the principal residence and up to 10 contiguous acres. If the property is located in a multi-dwelling building, the qualifying property is the part of the building used as the principal dwelling plus a percentage of the common areas and the land on which the building is located.

Eligible homeowners can apply for the deferral until April 1 by submitting applications to the municipality where they live. The municipality will work directly with Maine Tax Services to process applications and payments. Once approved, the resident does not need to reapply. The postponement may remain in place as long as there is no disqualifying change in circumstances.

Maine Revenue Services will place a lien on the farm as security for the taxes paid plus interest. According to Kelsey Goldsmith, director of communications for the Department of Administrative and Financial Services, the interest rate for the state’s property tax deferral program is statutorily 1% lower than the standard Maine Tax Services interest rate. .

This rate is 5% for 2022, which brings the interest rate of the property tax program to 4% for the current year. By comparison, the APR for a Maine State Credit Union home equity line of credit was listed “as low as 3.25%,” but the rate is variable and conditions apply.

In an email, Goldsmith said, “The state’s property tax deferral program is designed as a lifeline for those who are older or disabled with no other option to pay their property taxes and who would be otherwise on the verge of losing their home. Due to the program’s strict income and liquid asset thresholds, as well as the likelihood that participants will already be in arrears, those eligible for the program may not be eligible for standard loan products available in the private sector.

Participating owners will receive an annual notice with the current balance, and deferred taxes plus interest must be repaid at the end of program participation, whether paid by the owner or the owner’s estate.

Situations that trigger repayment of the loan include the death of the owner, the sale of the home, a change in the owner’s primary residence (except for health reasons), removal of the property from the program and, in the case of a mobile or floating home, removal from Maine State property.

Lincoln County Commissioner Bill Blodgett said he doesn’t think many people who could benefit from the program are aware of it. He said he would like to see cities play a role in informing residents who might be eligible.

“It’s an opportunity for people who have very limited assets to continue living in their homes,” he said.

The program is funded by a $3.5 million allocation from the American Rescue Plan Act through the Maine Jobs & Recovery Plan of Governor Janet Mills’ administration. Loan repayments when the property is sold or becomes part of an estate will be used to sustain the program indefinitely.

Applications can be obtained at

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