Tuesday, March 7, 2017

Property Tax Credit for Long-time Homeowners and Retired Veterans

Good news, today we approved my bill to create a new property tax credit for residents who are at least 65 years old and who have lived in the same home for at least 40 years. The bill also provides a tax credit for residents 65 or older who are retired veterans of the U.S. military.

As introduced, Bill 42-16 would have created a new property tax credit for residents who are at least 65 years old and who have lived in the same home, with an assessed value of $500,000 or less, for at least 40 years. Retired members of the U.S. Armed Forces (Army, Navy, Marines, Air Force and Coast Guard) who are at least 65 years old also are eligible for the credit if their home has an assessed value of $500,000 or less.

However, the approved bill included an amendment that increases the maximum assessed value for eligibility for 40-year homeowners to $650,000.

Residents who qualify are eligible to receive a 20-percent credit for the property tax imposed on their homes. The credit would be granted annually for up to five years, subject to application requirements.

We want to do whatever we can to encourage people who love living in Montgomery County to continue to be able to live here as their life circumstances change. We understand that this can be an expensive place to live for many people at the prime of their earning power, and it gets more challenging for those in retirement years. With this bill, we can offer some help to people who have lived here a long time and helped build this County and to those who served our country and helped preserve and protect all the things for which we are thankful.

The bill will go into effect on July 1, 2017. Those seeking a credit must apply by April 1 of the year in which the tax credit is sought. However, for 2017 only, the deadline was extended to September 1. I'll let you know when the application process has been finalized.


3 comments:

Local Tax Expert said...
This comment has been removed by the author.
concerned homeowner said...

Not much benefit and incentive in this bill. 40 years in same property would discourage long term owners from downsizing, realizing some cash out from sale to provide for cash in later years. Why have a limit of only 5 years for the tax credit? Doesn't make sense. More appropriate requirement would be 40 year home ownership in county independent of property with no five year limit. No incentive for me to stay in the county.

Local Tax Expert said...

A low or moderate income homeowner who qualifies for both the homeowners tax credit and the long-time homeowners credit will actually have their homeowners tax credit reduced by half (50%) of the long-time homeowners credit because of the way that the SDAT calculates the homeowners tax credit. In other words, the low or moderate income homeowner would actually have to pay more taxes if they applied for the long-time credit than if they did not apply for it. I know this is hard to believe but it is true. You can check with the finance director or the treasury director, as they have the documents that prove it. The only way that this would change is if HB633, sponsored by Delegate Al Carr, becomes law.