New Property Tax Relief for Seniors in Maine – Apply by December 1
A program has been created for seniors in Maine that offers them the ability to sidestep all local property tax increases on their homes – potentially permanently – but only for those who apply each year, beginning December 1 of this year.
LD 290, signed into law earlier this year, created Title 36, §6281 in Maine’s statutes. The bill’s flashy title is “An Act To Stabilize Property Taxes for Individuals 65 Years of Age or Older Who Own a Homestead for at Least 10 Years.” Its merciful nickname is the “Property Tax Stabilization Program.”
The bill took a legitimate route under Maine’s rules for creation of legislation, but it definitely took a “road less traveled” on its pathway to law. It first survived an “ought not to pass” decision by the Taxation Committee charged with first vetting it. It was tabled at the end of that legislative session, only to be resuscitated at the beginning of the next one, approved by the House and Senate, and then became law after the governor chose to neither sign it nor veto it. Perhaps due to its quiet jaunt through Augusta’s gauntlet, the program seemingly has flown under the radar.
The program allows senior citizens who meet some straightforward criteria to freeze their property tax bills in perpetuity, even if they sell their homes and relocate to other primary residences in Maine – as long as they annually file application forms.
A detailed, but easy-to-read description of the program is found on the state’s website (links are provided below), and some highlights are as follows:
Qualifying individuals are eligible for the program only if they apply in advance by December 1 each year. By completing the application, they assert that by the following April 1 (April 1 being the beginning of the tax year for which the application is made) they will meet the following criteria:
- The applicant must be at least 65 years of age,
- Be a permanent resident of Maine,
- Have owned a Maine home for at least 10 years, and
- Is eligible for a homestead exemption on the property.
Benefits often come with a lot of restrictions, but this program’s guardrails are placed far wider than most. For instance:
- If the property is owned jointly, only one owner needs to meet the above criteria.
- The 10 years of ownership do not have to be consecutive.
- There is no income or asset-based limit placed on applicants.
- There is no clawback provision; if a property is removed from the program, the benefit does not have to be repaid by the participant.
How does the program work?
The program is run by the state, but administered (from the applicant’s perspective) by the municipality. Here is the chronology:
- By December 1 of each year, an applicant files a completed application (and any related proof of qualification) with their local (town/city) assessor, related to taxes for the upcoming/following year.
- The assessor determines eligibility, and communicates that decision to the applicant.
- Qualifying applicants receive a property tax bill that is frozen at the prior year’s amount.
- By November 1 of each year, the municipality applies for reimbursement for the difference between the amounts billed and the amounts that otherwise would have been billed (the collective frozen vs. unfrozen amounts).
- Maine Revenue Services reviews municipalities’ claims and funds the subsidy to the towns/cities by January 15.
Can I really freeze my taxes permanently?
The program truly is structured to freeze taxes in place permanently, at the amount billed for the year in which the first application was made – but only if you are not asleep at the wheel. Each year requires its own application, and you must apply each and every year. If you fail to do so, your taxes will climb beginning that year to an unsubsidized amount (which could represent several years’ worth of increases all at once) – and they will never go back. You can apply again the following year, but your new baseline (the new amount locked in/frozen going forward) will be that unsubsidized amount, rather than the originally frozen amount. Clearly, forgetfulness can be very costly.
When does this program begin?
Under state law, all local property tax years begin and end on April 1. (Those of us who own some property and fight a losing battle with the yard, its pests, weeds, and stubborn lawn understand why the tax year begins on April Fool’s Day.) The first tax year eligible for the program begins April 1, 2023, and successful applicants (who apply by December 1, 2022) will see their bills for that period capped at the amount billed for the prior period (April 1, 2022). Applications are available now, and to qualify for the first potential year of eligibility, applications must be filed no later than December 1, 2022.
Maine’s Property Tax Stabilization Program allows many of Maine’s senior citizens to freeze the amount of property taxes they pay each year, immunizing them against inflation on that front. To do so, those who qualify must apply by December 1 of each year, or risk having their property taxes reset irrevocably to a potentially higher amount. The attentive applicant, however, has the ability under the right circumstances to lock the tax at the current level permanently.
The following information about the Property Tax Stabilization Program may be found on the state’s website:
- Description of the program for applicants, including Q&A
- Application form (the first one is due December 1, 2022)
- Guidance for municipalities
For more information, please contact Stanley Rose or you BNN advisor at 800.244.7444.
Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.