Property Taxes, and Possible Ways to Lessen the Pain for Seniors

by Carol Lew
Posted on: June 29, 2022 - 7:55am

Due to the sharp increases in education costs and the ever-increasing costs of running our town, taxpayers in will soon experience a rise in property taxes. It’s not good news for any of us, but for some Washington residents, it could be a real hardship. There may be ways to reduce the hit for some of us. This article introduces you to the avenues available to seniors that are governed by state law. The article does not include comprehensive list of tax relief options; there are additional options for veterans or people with certain disabilities or hardships.

Senior Circuit Breaker Tax Credit

One targeted program to reduce property taxes is called a "circuit breaker" because it protects senior citizens from a property tax "overload" just like an electric circuit breaker: when a property tax bill exceeds a certain percentage of a senior’s income, the circuit breaker reduces property taxes to bring them back in line with that limit.

Seniors (65 or older before January 1, 2022), may be eligible to claim this refundable credit on Massachusetts personal income tax returns. The Circuit Breaker tax credit is based on actual real estate taxes or rent paid on the Massachusetts residential property you own or rent and occupy as your principal residence.

If you are a homeowner, your Massachusetts property tax payments must exceed 10% of your total Massachusetts income for the tax year. The assessed valuation of the homeowner’s personal residence cannot exceed $884,000.

For tax year 2021, your total Massachusetts income can't exceed:

  • $62,000 for a single individual who is not the head of a household.
  • $78,000 for a head of household.
  • $93,000 for married couples filing a joint return.

The maximum credit amount for tax year 2021 is $1,170. If the credit you’re owed exceeds the amount of the total income tax payable for the year, you’ll get a refund. The schedule CB must be completed within 3 years from the last day for filing the return.

If you are a renter, there may be options to be a circuit breaker tax credit. You’ll find more information on that in the link below.

You aren’t eligible if you are a nonresident, if you are married and your status is married filing separately, if you are a dependent of another taxpayer, if you receive a federal and/or state rent subsidy, if you rent from a tax-exempt entity, or if you did not complete a Schedule CB within 3 years of the tax filing date.

There are more details here.

Senior Exemption

An exemption relieves a taxpayer from the legal obligation to pay all or a part of the tax assessed. Two senior exemptions are listed here; you can receive one or the other, not both.

In Washington, you may qualify if you were over the age of 65 as of July 1 of the year taxes are due. The income threshold is $20K single/$30K married. The asset threshold is $40K single/ $55K married (your home value is not part of your asset calculation). Up to $1,000 could be exempt if you qualify.

If you are over 70 and your income is more than the above threshold, but your assets are less than $20K (not counting your primary home), you could qualify for a $175 exemption. The “Senior Exemption- Form 96-1” is used for both of these senior exemptions. There are other requirements, such as the number of years the applicant has resided and owned property in Massachusetts.

You must file an Exemption Application on or before April 1, or 3 months after the actual bills were mailed for the fiscal year, whichever is later. You must pay all of the taxes on your bill when they’re due, even if your application is in process. You’ll accrue interest charges that can’t be waived if you don’t. If your application is granted, you’ll receive a refund of any overpayment.

Property Tax Abatements

An abatement is a reduction in the tax assessed on your property. Generally, abatements are granted when taxpayers are able to prove that the fair market value of their property is less than its assessed value. A taxpayer may apply for abatement for the following reasons:

  • Overvaluation – The taxpayer disagrees with the local assessors' appraisal of the fair cash value of the property or believes the valuation reflects a data or other error.
  • Disproportionate assessment – The taxpayer believes that the property is valued at a higher percentage of fair cash value than other properties due to an intentional, discriminatory assessment policy.
  • Statutory exemption – The taxpayer believes an exemption applies based on the ownership or use of the property

You’ll find an Abatement application and a link to “Property Tax Abatement Tips” here.

Property Tax Deferral for Seniors

Under Clause 41A, seniors may also be able to delay payment of their property taxes. A property tax deferral does not reduce the tax obligation like an exemption. Instead, it defers payment until the senior sells the property or passes away. A deferral allows seniors to use resources that would go to pay taxes to defray living expenses instead.

To be eligible, you must be 65 or older, your domicile must have been in Massachusetts for at least 10 consecutive years, and there are other detailed requirements regarding ownership of the property. Your income for the year previous to filing cannot exceed $20,000 as an individual or couple. You may defer payment of all or part of the taxes owed each year so long as you continue to qualify, and the deferred taxes and accrued interest are not more than 50% of your proportional ownership share of the fair cash value of the property. Interest on deferred taxes accrues at 8%.  The payment of deferred taxes and accrued interest is due when the property is sold or you pass away, unless your surviving spouse continues to defer. As of that date, the interest rate goes up to 16%. If 6 months later, the deferred amount has not been paid, the treasurer may petition the Land Court to foreclose the lien on the property.

 

All of this can be pretty confusing! Fortunately, we have someone in town who knows all of the ins and outs of most of these tax savings avenues. Except for the Circuit Breaker Tax Credit (which has to do with State Income Tax), Mary Jarvie can answer questions you might have. She works in the Assessors’ Office at Town Hall, and she’s the one who processes applications for exemptions, and abatements. You can find her in the Assessors Office most Monday evenings between 6 and 8pm, and she’d also be happy to answer questions by phone. Her number is 413-329-6953. There are Tax Savings Tip flyers on a bulletin board in the hallway outside of her office as well; they explain all of the details of the different exemptions available. And you can find more detailed information and forms for exemptions here.