What Can Senior Citizens Do For a Property Tax Break?
One of the things that Massachusetts seniors face in many of the destination towns where schools are top notch is the growing burden of higher taxes. There is almost always a correlation between a towns popularity and the market value of the homes.
When you look at why property values are higher in one town over another it usually boils down primarily to two factors; the location and the school systems rating. With great schools come a larger tax burden.
Even though Real Estate values have come down drastically in many Metrowest Massachusetts towns over the last five years it does not mean that the Real Estate taxes have as well.
One of the common lines of thinking that occurs when Real Estate values are heading downward is that a home owners tax bill must also be coming down too. Part of this misconception occurs because people assume that the fair market value and assessed value are the same.
In theory this should be the case but assessed values are nothing more than a yard stick for a municipality to collect an appropriate amount of taxes to sufficiently cover the state and local appropriations chargeable to the city and town. Towns adjust the tax rate and a properties assessed value to achieve this goal. For a complete explanation see Assessed value v.s fair market value.
For many seniors on a fixed income this can become a tough financial burden to deal with.
Given the fact we are located in a state known as “Taxachusetts” it is hard to believe there are actually tax programs in place to save you money.
There are a few programs worth discussion including: clause 41c for elderly residents, clause 17d which is an exemption for seniors, surviving spouses, and minors, clause 22 covering veterans, clause 37a which covers the blind and two others know as the Circuit Breaker and the standard tax deferral.
Below is an explanation of each one of these exemptions:
Clause 41C – Clause 41c is for elderly residents. Residents who are 65 years old by July 1 may qualify for a $1000 dollar tax credit. The income requirements for this program if single are $23,718 per year and assets not in excess of $40,000. If you are married the income requirement is less than $35,578 and assets not is excess of $55,000. The other requirement with 41c is that you have to be living in Massachusetts for the last ten years and owning/occupying property for the last five.
Clause 17D – Clause 17d is an exemption in the amount of $208.39. In order to qualify for 17d a senior must be 70 years old by July 1 and surviving spouses must be a widow or widower by July 1. For a minor to qualify for this program they must have a deceased parent and own the property. In all of these circumstances the total worth may not exceed $40,000 excluding assessed home value.
Clause 22 – There are various exemptions for veterans and their spouses ranging from $400-$1000. In order to qualify you must have certification of a war related disability and also not have been dishonorably discharged.
Clause 37A – Clause 37a applies to those who are legally blind as of July 1. The tax credit is $500. In order to qualify you must also be registered with The Massachusetts Commission for the blind.
Tax Deferral– Residents 65 years or older can defer all or a portion of their taxes at a rate of 5% interest. In order to qualify residents must have lived in MASS for the past ten years and owned/occupied their home for the last five years. Gross annual income must not exceed $40,000. This a a program that not many people are aware of. In my home town of Hopkinton MA the town places when the deferral is approved and payment is made upon the sale of the home.
The Circuit Breaker – This exemption is available to residents age 65 and over whose property taxes exceed 10% of their income. This figure includes water and sewer bills.
What are the requirements?
- Own or rent residential property in Massachusetts and occupy the property as primary residence.
- Have an annual income of $51,000 or less for a single filer; $64,000 or less for a head of household; or $77,000 or less for joint filers.
Who is not eligible for the Circuit Breaker Credit?
- Married persons who do not file jointly for this credit.
- Those who are a dependent of another tax filer.
- Those who receive federal or state rent subsidy directly; or those who live in a property-tax exempt facility.
- Those whose property is assessed at a value of $788,000 or more.
These are great programs that many seniors in the Metrowest Massachusetts area could be taking advantage of. I suspect that if more people knew about these tax programs they would be filing for them. These tax programs are not well publicized so I am hoping to spread the word in order to help a few senior citizens save some money.
It would be great if there were other programs such as these that more people in Metrowest Massachusetts could take advantage of. The cost of living here is high and there are others besides seniors who could use the help.
One other thing to remember as well is that if you feel your tax assessment is high relative to other like homes in your town, you can appeal your Massachusetts property tax bill. Here is a very detailed guide on how to get a property tax abatement when you know that you are being assessed higher to other similar homes in your area. This article gives an explanation on how to know if you should be filing an appeal for taxes that could be too high. You will also see an exact procedure to follow to challenge the town on value.
The information contained here is believed to be accurate, however every person’s individual tax situation may be different, therefore before acting on the information contained herein, I would urge you to consult a qualified tax accountant or attorney.
About the author: The above Real Estate information on Massachusetts property tax relief was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at firstname.lastname@example.org or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 27+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.
Hey Bill–thanks for the message over on AR. I love the look and feel of your Massachusetts Blog. Now you’ve got me thinking if I should do one for my area too. Thanks for the inspiration!
Thanks Erica I appreciate the compliment. I an loving the look and feel of my new Massachusetts Real Estate blog:)
Bill, so many seniors are in very tight financial spots. There are of course other seniors who retired with a great pension and had investments that paid off for them so they do not need to worry – but many are not in that boat. That’s great that Massachusetts offers some tax breaks for them.
I come across people all the time who do not understand assessed value – they are looking at a home priced $130,000 but they balk, cause the tax records say it’s assessed at $45,000. (or whatever it is.) And in my area, assessed value usually does not go up after a sale except perhaps in the case of new construction due to it being a vacant lot before…
Here is an informative article for those who may benefit… including not only senior citizens, but those are involved in planning and care. THANKS!
Bill you are so right, many of our seniors are struggling and every little bit helps. It is sad to see cases where seniors own their home outright but can’t afford the taxes, who need that stress in there golden years?
Very nice blog full of great MA real estate information. This post on seniors is particularly interesting!
Thanks. Does total asset value include IRAs and 401Ks? It is so important that people know this information.
Hi Barbara – I am not sure I completely understand your questions but in regards to these laws I do not believe retirement accounts have any bearing on the programs.
Bill: Have you been able to verify whether retirement accounts do, in fact, count as
assets? They can change – as so many of us know with this recession. How can this
be checked out?
Joan I have not seen anything that talks about retirement accounts as part of the qualifications for any of the Massachusetts tax relief for seniors. To be certain I would check with a local attorney.