Can Senior Citizens Freeze Their Property Taxes?
May 12, 2022General Retirement
Retirees still have to pay property taxes, even if they don't have a job. Since they can't earn anymore, can senior citizens freeze their property taxes?
With employment no longer an option, many senior citizens tend to look for ways to save money, one of which can be through making use of tax cuts and freezing their property taxes. Depending on the state, this can be a huge difference between living hand to mouth and living comfortably.
Property owners above 65 years of age can use the "senior freeze" option. This is a property tax postponement program where the state pays either part or all of the property taxes of the senior citizen.
While property tax exemptions are options for seniors, there are many rules and regulations that you need to be aware of in order to make the most of these exemptions. Here, we will take a closer look at the property tax breaks that seniors can avail.
As experts in property law, we can help guide you through your options as well as the processes involved when seniors are trying to apply for property tax exemptions.
Table of contents
Can Senior Citizens Freeze Their Property Taxes?
When you own real estate, you nearly always have to pay property taxes. However, certain states and municipalities are kinder than others, especially when it comes to tax exemptions for different groups, such as seniors.
Older taxpayers are frequently in a situation where the value of their properties has grown so dramatically over time that their tax obligations have become practically unaffordable at a time when they are living on a limited income.
Several taxing authorities are aware of this and have taken initiatives to reduce the tax load on the elderly.
In the United States, the property tax is the principal source of revenue for local governments. According to analysts, property tax has always been unpopular because it is one of the most visible taxes – since most homeowners pay it with a few checks each year.
This tax can be a source of anxiety for older Americans on fixed incomes who are concerned about being priced out of their homes. Property tax limitations have grown commonplace across the country as a result of the tax's unpopularity.
Homestead exemption and credit schemes exist in nearly every state, allowing seniors and other qualified persons to have a portion of their home's worth free from taxation. Six states have property tax freeze programs that prevent qualified residents from paying higher property taxes.
Local governments typically have the option of participating in these initiatives. For tax purposes, ten states have assessment freeze systems that limit how much property values can rise in a year. State property tax freezes and property assessment freezes are included in 14 states.
What is a Tax Exemption?
Exemptions have no bearing on tax rates, and they don't usually reduce your tax liability. As the name implies, a tax exemption exempts certain income, assets, or portions of such income and assets from taxation.
Property taxes are enforced at three levels: state, county, and local. The Internal Revenue Service (IRS) isn't involved in this area of taxation, which can be both good and bad.
For federal taxes, there are uniform standards that apply across the country, but property tax laws vary greatly from state to state. Even within the same county, they might differ from one city to the next.
In the case of property taxes, your state may decide to freeze the value of your home, on which property taxes are calculated, and an increase in its worth over this level isn't taxed.
Over this amount, the value is "exempt." Some states reduce the taxable value of your home by a certain percentage or dollar amount.
Who Is Eligible?
Many places have their own set of income criteria. If you make too much money, you won't be eligible, or your exemption will be decreased. These restrictions can be rather strict in some areas, ranging from $20,000 to $30,000 in extreme cases. Prescription medicines and other medical expenses can be deducted from your income in some parts of New York to help you qualify.
However, the age of 65 is by no means a hard and fast rule. It's only 61 in Washington State, and New Hampshire will gradually boost your exemption as you become older, almost like a birthday present each year. However, you must be at least 65.
Many places need you to have owned your home for a certain amount of time. In New York, the time of ownership is 12 months; however, if you qualified in your former residence, you can transfer that period over to your new home. A similar rule exists in Cook County, Illinois.
You must also live on the premises. It has to be your primary abode. If you need to go into a nursing home, New York allows you to make an exception if you still own your home and your co-owner or spouse still resides there. Investment, commercial, and rental properties, on the other hand, are rarely exempt.
Senior property tax exemptions usually have a minimum age limit of 61 to 65 years old. While several states, such as New York, Texas, and Massachusetts, need seniors to be 65 or older, others, such as Washington, just require them to be 61 (as mentioned above).
Claiming Senior Tax Exemptions
If you are an eligible older adult, this program restricts the amount your property taxes can increase each year. The "freeze" maintains the assessed value of your home. The assessed value is the monetary amount used to determine how much property taxes you will have to pay.
This does not guarantee that your property tax bill will not rise. Also, if the property value rises as a result of renovations, the freeze will be lifted.
If you are 65 years old or older and fulfill the program's income guidelines, you are eligible to participate. The quantity of money you can earn is determined by the county where your principal residence is situated.
You must also own your house, pay property taxes, and use it as your principal residence.
Additional residences you own in the state, such as vacation homes or rental properties, are not eligible for a value freeze. You must also own the land where your mobile home is located if it is your primary residence and you pay property taxes on it.
Claiming senior tax exemptions, such as property tax freeze, is not difficult. However, some procedures need to be followed. It's critical to submit your application for a senior tax exemption before the time set by your state. The deadlines for each state vary.
The deadlines for filing, as well as the relevant papers and instructions, may all be found on most states' websites. Property tax exemption applications are usually submitted to your local county tax office.
While most states provide basic exemptions for individuals who qualify, your county may provide additional benefits. Whether you're applying for state or county tax exemptions, you should contact your county's tax commissioner for more information on whether you qualify for tax exemptions.
You'll be eligible every year as long as you meet the requirements. Every 3–6 years, you will be requested to renew your application. When your exemption is due to expire, your county assessor should mail you a renewal application.
So, can you seek a property tax exemption if you've already paid it? Maybe. If you previously qualified for a property tax exemption but did not apply, you may be eligible for a refund of taxes paid. In most cases, you may only receive a refund for the previous three years.
In specific hardship cases or for exemption renewals, several towns allow late submission. Check with your municipality's assessor to discover if these provisions are available.
If a senior meets the criteria but purchases property after the deadline, he or she can apply up to 30 days after the acquisition. After then, the assessor has 30 days to consider whether the senior would have been eligible for the exemption if he or she had owned the property at the time of the deadline.
About THE AUTHOR
With multiple family members currently in senior living facilities, David is in the trenches every week, learning the ins and outs of nursing homes, assisted living, memory care, and general senior living.Read more about David Bolton
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