Tax Relief

Portland is contemplating choices to alleviate property tax for seniors

September 9 – Portland city officials are considering a temporary program that would offer seniors additional wealth tax breaks until a new state tax deferral option goes into effect next year.

Consideration of a “bridge” program to help fixed income seniors pay their property taxes and avoid liens emerges as the city completes a revaluation that has doubled or tripled the value of homes in some parts of Portland .

The city council’s finance committee will hold a public hearing on Thursday to discuss the proposed bridge program, which would both double the maximum tax credit from $ 1,200 to $ 2,400 and allow residents to finalize a payment plan for the remaining outstanding balance up to the state Program comes into effect. Eligibility is based on income.

Portland’s first reassessment in 15 years came as home prices skyrocketed across the city and across the state. While many Portlanders saw their tax burden decrease due to the revaluation, the highly competitive real estate market and soaring tax bills in some neighborhoods are expected to make it difficult for others to stay in their homes. Homeowners in the peninsula, particularly in the East End, saw the greatest increases.

Brendan O’Connell, the city’s chief financial officer, said staff are proposing a bridging program to support qualified seniors until a tax break bill signed by Governor Janet Mills in July goes into effect in the fiscal year of FY23. Portland has lobbied at the state level to support the law deferring property tax for eligible homeowners until their homes are later sold. Under this program, the state pays the municipality all property taxes due and places a lien on the property, but does not exclude the loan so the owner can stay in their home for as long as necessary.

The new law reintroduces the state’s property tax deferral program that came into force from 1989 to 1991. It allowed the state to pay the entitled person’s property taxes, which are then reimbursed from the estate if the landowner (s) dies or sells their home.

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The state is using $ 3.2 million from the federal rescue plan to set up the Senior Tax Deferral Revolving Account through fiscal 2023. After this year, standard funding from the HOME Fund will be provided through MaineHousing, the state’s housing agency.

O’Connell said the program is a win-win for everyone, but the city can take steps until it goes into effect to help seniors who are now struggling to pay their property tax bills.

“We want to make sure that none of these seniors get a lien because if you have a lien on your home you don’t qualify for the state program,” he said.

The first component of the bridge program recommended by the city staff is an increase in the Portland Senior Tax Equity Program (P-STEP), which the city approved in 2017 for residents over 62 years of age. Last year 180 property owners qualified for the program.

To qualify, a homeowner or renter must be at least 62 years old and also have received the Maine Property Tax Fairness Credit. This program is open to individuals with a maximum adjusted gross income between $ 33,333 and $ 53,000, depending on household size. Property taxes paid must be more than 6 percent of household income, while rents must exceed 40 percent of household income.

According to the city’s proposal, the reimbursement amounts for the program would double from a maximum of $ 1,200 to $ 2,400 and be applied directly to property taxes due. This will cost the city an estimated $ 100,000 in fiscal 2022.

The second component of the plan – creating a bridging program for those who would qualify for the new state program – requires significant additional administrative overhead, but is crucial for those in need, according to O’Connell. To achieve this, real estate taxpayers who meet the state criteria would be provided with a bespoke payment plan that leverages all available resources, including P-STEP, to provide a repayment bridge for fiscal 2023 when the state deferral program becomes available.

The finance committee is expected to discuss and vote on the proposal on Thursday. It then goes to the city council, which has to approve the plan, as it is a change to the city ordinance to increase the maximum payment.

This story will be updated.

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