Property tax deferral programs are employed in some parts of the country to provide additional financial stability for a state’s older residents, but the state of Maine recently repealed a variation of its own deferral program less than a year after it was originally implemented.
Such programs have particular relevance for the reverse mortgage industry. Reverse mortgages allow seniors the ability to eliminate their monthly forward mortgage payment, but key borrower requirements include continuing to pay mortgage insurance premiums, costs associated with a home’s upkeep and the payment of associated property taxes.
Certain states maintain programs for seniors that allow them to defer their property tax payments to a later date in order to provide financial assistance for those living on fixed incomes. In 2022, Maine enacted a targeted program for its seniors called the “Property Tax Stabilization Program,” but the state legislature repealed that program last month.
Maine already has a more generalized property tax deferral program, but this “stabilization” program was only available to seniors aged 65 or older and those who had owned their home for 10 nonconsecutive years. Selected applicants can have their property tax rates frozen at the prior year’s level, and the freeze can continue so long as applicants re-applied every year.
Issues related to the scope of the relief and the program’s impact on the funding levels of state municipalities were key to its downfall. In its place will be supplemental additions to existing laws that advocates say will provide greater assistance to low- and middle-income Maine seniors, according to reporting at local outlet the Boothbay Register.
“It was problematic,” said Rebecca Graham, senior legislative advocate with the Maine Municipal Association to the Register. “It was clear to the state that it was not sustainable. It should have been means-tested. People who can afford taxes shouldn’t be subsidized by people who can’t.”
The decision was further explained by State Rep. Holly Stover (D), who said that the program as enacted did not target area seniors who could’ve most benefited from such relief.
“While very well-intentioned, the Senior Property Tax Stabilization Program that was passed last year had significant flaws,” Stover told the Register. “With no income eligibility requirements or limits based on property value, the program did not target relief to those who actually need it and created significant financial concerns for our municipalities.”
Instead, the legislature is expanding the state’s pre-existing Property Tax Deferral Program and Property Tax Fairness Credit, she said.
Those expansions will require applicants to meet certain income requirements, to own and occupy the property as their principal residence and be “receiving a homestead exemption on the property,” the reporting said.
Reimbursements to municipalities — a key contributor to the prior program’s repeal — are also improved.
