Tax Relief

New regulation will deliver tax breaks to 1000’s of Maine seniors

The legislation, which Governor Janet Mills signed on Monday, will cut property taxes on thousands of Mainers 65 or older who earn less than $ 40,000 a year.

The property tax deferral program is subject to conditions. The state pays property taxes for individuals who file an application and qualify, but the state has the power to obtain a lien on the applicant’s real estate. All property taxes paid by the state are returned to the state if the property is sold or the participant or participants die.

Bill’s main sponsor, Senator Donna Bailey, D-Saco, said the timing of the legislation, which she has been working on for several years, couldn’t have been better as South Portland and Portland taxpayers struggle to come to terms with new property valuations who, in some cases, have caused their property tax bills to rise in areas they cannot afford. Bailey said her law will allow seniors to age on the spot without fear of community reprisals for non-payment of property taxes.

Tax breaks under the property tax deferral program would not be capped and would be based solely on an individual’s property tax bill, Bailey said.

“I hear too many stories from seniors who just can’t afford food, medication, and property taxes, which means they end up having to choose one and then leave with no necessity,” she said. “Seniors have worked hard their entire lives paying off their mortgages and earning a quiet retirement from their homes. But the reality is that they are struggling to pay the ever-increasing property taxes. Eliminating senior property tax has been one of my top priorities since I first became lawmaker and I am so proud that this is finally becoming a reality. “

The legislation, LD 1638, will rely on federal pandemic relief funds to restore a broken tax deferral program that began in 1989 but was suspended in 1991 during a national budget crisis caused by a recession. The state continued to collect revenue from the old program and was repaid for all tax deferrals paid to the municipalities. The last person on this program died in 2018 – the year the last repayment was collected.

The new law goes into effect October 18, 90 days after Mills signs it.

Bailey said the senior citizen tax relief program will not run out of money. Another bill passed, LD 1733, provides for $ 3.2 million in Federal American Rescue Plan funding to set up the Senior Tax Deferral Revolving Account. These tax breaks are available until the 2023 financial year. Thereafter, the tax breaks will be provided from the MaineHousing-managed Housing Opportunities for Maine (HOME) program. The perpetually funded program receives income from land transfer taxes paid by buyers and sellers.

“The HOME program has always been well funded and never ran out of money,” said Bailey.

It is not clear how many seniors are eligible for assistance under the “Law to Help Seniors and Certain Persons with Disabilities Stay in Their Homes by Deferring Property Taxes”. Bailey said it would be fair to say that thousands of Mainers are likely to be eligible. Maine Revenue Services, which were involved in the development of LD 1638, were unavailable Wednesday night.

“The majority of Maine seniors who receive Social Security benefits will likely qualify,” added Bailey.

A representative of the Maine Council on Aging testified in May before the joint standing tax committee on the bill. He told committee members that there are more than 300,000 Maine residents over 65. The Maine Council on Aging said social security benefits as a source of income mask the poverty of elderly Mainers.

“While fewer than 10 percent of elderly Mainers live at or below the federal poverty line, more than a third of Mainers 65 and older are living on social security alone with an average income of just over $ 18,000,” said the council written testimony. “That’s just 140 percent of the federal poverty line and the income is insufficient to meet the basic needs of these people.”

One of the co-sponsors of Bailey’s bill was Senator Joseph Rafferty, D-Kennebunk.

“Seniors are already facing numerous challenges, especially onerous property taxes. Many seniors have lived in their homes for decades while contributing to the growth and prosperity of their community, “Rafferty said in a statement. “This tax break for the elderly is intended to ensure that they can continue to live without fear of displacement.

Property taxes have risen sharply since 2020, mainly as a result of a property purchase fueled by the COVID-19 pandemic.

Bailey and Rafferty said higher property taxes hit seniors especially hard because they often live on fixed incomes that can include retirement plans and social security. Legislators said 29 percent of Maine seniors live in low-income families and 56.4 percent of Maine seniors who receive Social Security payments receive an average of $ 11,964 annually.

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