Hold On, Maine Seniors. Property Tax Relief Is Coming

Image of a lighthouse on a large body of water in Maine.

Maine will cover property taxes for homeowners aged 65+ who have annual incomes under 40K. Thousands of homeowners — most of Maine’s residents who receive Social Security benefits — will be eligible for the benefit. The provision, LD 1638, takes effect on Oct. 18, 2021. There is a catch for these eligible owners, though.

Here’s the story.

Tax Bills Rising All Over

Homeowners pay into property taxes based on their homes’ assessed values. This year, property taxes are going up all over the country at a rate exceeding 6% — higher than 2020’s 4%. Residents in some states are paying more in property taxes than they pay on their mortgages. Of course, once a mortgage is paid off, the property tax bill is a major ongoing payment, together with homeowner’s insurance and general upkeep.

Even where property valuations stop rising or begin to decline, homeowners can still get hit with rising property taxes. The cost of municipal services can go up. Commercial property owners might lose value, leave the area, or otherwise fall short of paying enough to cover what townships need to make a budget work. It then falls to the residential properties to pick up the slack.

In other words, while rising home values are the usual cause for property tax hikes, they’re not the only impetus.

When property taxes get out of hand, resident protests become more common. And longtime residents may choose or be forced to move.

Where are property taxes the highest? Where are the lowest? And how can these assessments be challenged? Read more on property taxes, and how not to overpay them, from Deeds.com.

Maine Home Values Soar

The pandemic changed homebuying trends across the continent. Maine became one of the especially desirable places to live. Portland received a steady influx of people from other states. And South Portland is experiencing rapid gentrification in the midst of the home buying frenzy. Statewide, buyers have been waiving contingencies and bidding against each other, driving valuations sky high.

Property revaluations and new tax assessments have kept rolling, tracking the stunning boom in property values. Local governments are using updated assessments, now reflecting soaring market valuations, to calculate their residents’ property taxes.

As homeowners’ tax bills are rising 10 to 50 percent, Maine residents are being squeezed to their financial limits. And that’s in addition to the health and income struggles they may have had with virus-related shutdowns and slowdowns.

☛ Under 36 Maine Revised Statutes § 151, Maine homeowners have 60 days from when they receive their tax assessments to request that the revenue department reconsider the tax determination.

Impact on Maine Seniors

Maine has more than 300,000 residents aged 65+. Some are affluent. Some are not. Looking at the latter group:

  • More than a fourth of Maine’s senior population is living in low-income households.
  • More than a third of Maine residents aged 65+ depend solely on Social Security benefits, with an average income of just over $18,000.
  • In Maine, women aged 65+ are especially likely to manage their homes by themselves.
  • Female seniors who live alone and have incomes below the median lack the financial resources to cover the basic staples of living.
  • Struggling homeowners usually have no way to find more affordable housing, as Maine is short 9,000 affordable homes needed by older residents.

As Maine home values keep rising, households relying on Social Security are having trouble juggling basic expenses with their rising property taxes. As a general matter, these homeowners refuse to go into default on their taxes. Some decide to skip meals or skimp on heat so they can cover the tax bills.

Maine Must Address the Issue

Image of a person sitting outside in front of a garden in Maine.

One hundred years ago, people had a life expectancy of about 60 years of age. Today, people look forward to living 80 years or more. And our preference across the country is to spend our later years in the comfort of our own homes.

But here’s the rub. Paying for home-based improvements and living assistance will compete with covering our property taxes. This is already becoming an urgent issue for the Maine.

Rather than tax retirees out of their Maine homes, Sen. Donna Bailey, chief sponsor of LD 1638, said the state must step in now and act to keep the townships from deeming elder homeowners delinquent in their taxes. Lawmakers across the state agree. The new provision received strong support in both the House and Senate of Maine’s legislature. Granted, Maine did have optional provisions for municipalities to offer their residents property tax relief. But LD 1638 forms a sturdier, statewide safety net.

Sen. Bailey notes that LD 1638 law will not cap any homeowner’s property tax deferral allowance. Nor will seniors face a “funds have run out” cut-off point on the benefit. The state will use federal Covid-19 relief money to cover the taxes.

Tax Deferral, Not Forgiveness

This is not the first time the property tax challenge has come up at the state level. Last time, the state created a property tax deferral option that only lasted two years. It fell by the wayside in the 1991 recession. Can the new law be an enduring solution? Likely so. A companion bill, LD 1733, allocates more than $3 million in federal relief money over the next two years to a new Senior Tax Deferral Revolving Account. That might not seem like a lot, but account funds will later be replenished by Housing Opportunities for Maine (HOME). Run by the Maine State Housing Authority, HOME receives continual income from property transfer taxes.

In any case, Maine property taxes will be deferred, not forgiven, for eligible homeowners. Under the new state law, the funds will be tied to a liens on the homes. Maine will cover taxes now, and then after the homeowner passes away, the government will place an assessment on the estate. As elderly Maine residents pass, property tax liens will continually be paid back to the state.

So, there’s no free lunch for seniors and their families. But at least this solution lets Maine residents stay in their homes while they live. We can expect to see more states creating solutions for their older residents as property taxes continue their upward climb.

Supporting References

State of Maine Legislature. LD 1638: An Act to Help Seniors and Certain Persons with Disabilities Remain in Their Homes by Providing for the Deferral of Property Taxes.

Robert Belanger for the Maine Council on Aging, to the Joint Standing Committee on Taxation: Testimony in Support of LD 1638 (PDF; May 13, 2021).

Written Testimony of Jess Maurer on Behalf of the Maine Council on Aging, to the Joint Standing Committee on Taxation: Testimony in Support of LDs 1136, 1443 & 1500 (PDF; May 6, 2021).

Kelley Bouchard for the Press-Herald (Portland, ME): Pandemic-Fueled Real Estate Boom Threatens Property Tax Hikes as Much as 30% for Maine Homeowners (updated May 11).

Dennis Hoey for the Press-Herald (Portland, ME): New Law Will Provide Tax Relief to Thousands of Maine Seniors (updated July 22).

Maine Revenue Services (Department of Administrative and Financial Services): Property Tax Relief Programs.

REALTOR® Magazine: Property Taxes Are About to Rise (Aug. 26, 2021).

Bill Smith for Evanston Now: Your Tax Bill May Rise Even if Assessment’s Unchanged (Aug. 5, 2021).

Photo credits: Steppinstars and brenkee, via Pixabay.