Fighting to Improve Senior Property Tax Deferals

AARP Massachusetts is fighting to improve the Commonwealth’s Senior Property Tax Deferment laws. AARP Massachusetts State Director Mike Festa testified at a hearing where more than 25 bills related to property taxes for the Commonwealth’s older residents were on the docket.

Tax deferrals allow seniors to use the equity in their home to defer paying their property taxes until the home is sold. There is no long-term cost to other taxpayer since the tax is repaid when the property is sold or transferred.

Festa testified in favor of House Bill No. 2974 and Senate Bill No. 1847- An Act Relative To Senior Property Tax Deferral.

Since the property tax is based on the value of the home, “It is in some ways more of a tax on wealth that is not directly related to a taxpayer’s current income and ability to pay” said Mike Festa, State Director, AARP Massachusetts “A drop in income results in a reduction in income taxes, and a taxpayer can curb their purchases to avoid paying sales taxes when their income declines. This is not so with the property tax, where the tax bill remains the same regardless of changes in the taxpayer’s income.”

Read our testimonyhere

AARP backs the proposed changes to the existing law are:

• Removing the 10-year Commonwealth residency requirement.
• Removing the requirement that the person filing for the deferral must have owned their household for the preceding 5 years, or if inherited, must have lived in the house for the preceding 5 years.
• Under this bill, the interest rate would be equal to the municipalities most recent bond rate if it has bonded within the last 3 years or the bond rate of the Commonwealth.
• Allowing interest accrued up to the death of the person whose taxes are being deferred to be extended one year after death.

Property taxes are an important source for local governments funding some of highest visible government services– schools, police, fire, parks, etc.  They are also the most burdensome taxes for many individuals with low incomes and older people. It affects people directly as homeowners and indirectly as renters. Landlords may pass on tax burdens in the form of higher rents. The tax is imposed on an illiquid, indivisible asset rather than income.

Changes in the law will help Massachusetts residents age with dignity in their own home and community where they want to.

An Act Relative To Senior Property Tax Deferral House Bill No. 2974 is sponsored by Rep. Tommy Vitolo. Senate Bill No. 1847 is sponsored by Sen. Patricia D. Jehlen.