By Charles Lane

The City of Somerville’s Council on Aging has provided a number of important tax tips for seniors, which we present here:

Taxpayers should be aware of a significant change to the Tax Deferral, Clause 41A program put forth by the Mayor and approved by the Board of Aldermen in FY 2016.  Clause 41A allows those 65 and older to defer up to 100% of their property taxes until such time that the property is sold or upon the death of the applicant.  Prior to FY 2016, deferred taxes were assessed an annual interest charge of 8% and an applicant’s income could not exceed $40,000.  With the change enacted by the City, the interest rate has been lowered to 4% per year and income limit has been increased to the maximum allowed at $56,000.

Additional eligibility requirements include ownership and occupancy in the Somerville property for 5 years and age 65 by the July 1 previous to the start of the new fiscal year.  Applications must be filed annually by no later than 3 months after the issuance of the actual bill.  Deadline for filing is April 1 unless the first falls on a weekend in which case the deadline is the next business day.

Qualifying for the deferral does not prevent an applicant the ability to qualify for other exemptions such as an elderly (clause 41C or 17D), veteran (clause 22), or other.  Applicants should know that the deferral places a lien on the property and requires payment of the deferred taxes upon sale of the home or the passing of the applicant.  However, for those with limited income and ability to make annual property tax payments, the program offers a viable alternative for managing property tax payments and finances in general.

Senior Circuit Breaker Tax Credit:

The senior circuit breaker tax credit is not granted by the Board of Assessors but allows a potential State income tax credit.  Eligible taxpayers who own their Somerville homes may claim a credit equal to the amount that their property tax payments including 50% of their water and sewer charges for the year exceed 10% of their total income for that tax year.  Income limits and maximum assessed value limits are adjusted each year by the State.

To qualify for calendar 2015, taxpayers had to be 65 on or before December 31, 2015.  Income could not exceed $57,000 for single persons, $85,000 for married filing jointly, and $71,000 for head of household.  Assessed value (full value excluding residential exemption valuation reduction) could not exceed $693,000.  In calendar 2015, the credit could not exceed $1,070.

As an example for illustration only, note the following:

Calendar 2015 property taxes plus 50% of water and sewer charges = $6,000

Calendar 2015 income = $50,000 X 10% =           – $5,000

Credit on State income tax =            $1,000

All taxpayers are urged to check with their accountant and/or read State income tax guidelines carefully.

Interested seniors can find more information at mass.gov/dor/seniors.

Hardship, Clause 18:

The hardship exemption allows the Board of Assessors to grant up to a full property exemption for taxpayers who by reason of age, infirmity, and poverty, are in the judgment of the Assessors unable to contribute fully to their tax liability. The Board may also grant an exemption based upon a financial hardship resulting from a change to active military status.

Additional requirements include ownership and occupancy of the property as of the July 1 for the fiscal year in question.  The applicant must be an individual and not a business entity or corporation.  All co-owners must independently qualify for the exemption to be granted.  Unlike deferral clauses, there is no lien placed on the property and no pay back of abated taxes.  Deadline for filing is April 1 unless the first falls on a weekend or holiday in which case the deadline is the next business day.

Temporary Hardship, Clause 18A:

The temporary hardship exemption gives taxpayers the ability to defer up to 100% of their property taxes.  To qualify, taxpayers, regardless of age, must have a demonstrated financial hardship and lack the resources to pay the taxes because of unemployment, illness, change to active military status, or other reason as determined by the Assessors.  Applicants may defer all or part of their property taxes for up to three consecutive years.

The deferred taxes plus interest must be paid with the first of up to five annual installments due two years after the last year of the deferral.  If the property is sold or upon the passing of the applicant during the deferral period, taxes plus interest must be paid as well.

Additional requirements include ownership and occupancy as of July 1 for the fiscal year in question and Massachusetts residency for the preceding 10 years. Deadline for filing is April 1 unless the first falls on a weekend or holiday in which case the deadline is the next business day.

Applicants should know that the deferral places a lien on the property.  However, for those with limited income and ability to make annual property tax payments, the program offers a viable alternative for managing property tax payments and finances in general.

Need assistance with your residential taxes?  You have until Monday, April 3, 2017 to file for FY Statutory Exemptions or Deferral.  Please call the City’s Assessor’s office at 617-625-6600, ext. 3100 or email at assessing@somerville.gov.