September 10, 2023

The New Maine Property Tax Stabilization Program Comes to an End

In August 2022, the Maine Legislature launched the Property Tax Stabilization program, a tax relief initiative aimed at assisting Maine residents aged 65 and above. However, merely a year later, in July 2023, the program was repealed, much to the disappointment of many.

The program, which was designed to cater to seniors who had owned their residence for a minimum of a decade and were beneficiaries of a homestead exemption, granted them the advantage of having their taxes frozen at the rate of the preceding year, irrespective of their income bracket.

Despite its widespread acceptance and popularity among residents, municipal officials throughout Maine had reservations. They believed that the program’s structure was flawed, making it unfeasible over the long term. Illustrating this point, the city of Saco alone had dispatched over 1,000 letters notifying elderly homeowners about the termination of the program.

Such was its demand that local government offices were overwhelmed with application forms. Yet, this immense popularity masked underlying problems.

Sean McCarthy, Deputy City Assessor of Saco, pointed out, “The abrupt discontinuation of this program caught many off guard.” He further highlighted the loopholes that facilitated misuse. He mentioned instances of residents switching their homestead claim from a humble dwelling to their opulent seaside mansion without altering the tax rate. Others took advantage of the program to expand their properties significantly, knowing that these additions would remain tax-free due to the program’s provisions.

McCarthy emphasized, “While the program did indeed assist its intended beneficiaries, it inadvertently favored others who were outside its primary focus, thereby diluting its original purpose.”

To mitigate the impact of the program’s cessation, Maine’s legislators have revamped two existing tax relief initiatives. Firstly, the Property Tax Fairness Credit, which originally permitted qualified residents to avail a $1,500 credit, has now been increased to $2,000.

The second initiative, the State Property Tax Deferral program, offers a crucial support system for elderly residents unable to independently cover their annual property tax bills. This program has undergone considerable expansion, doubling the income threshold to $80,000 and also increasing asset limits. However, it’s worth noting that beneficiaries are obligated to repay these taxes either upon selling their homes or when these properties are inherited.

For those who had previously enrolled in the now-defunct stabilization program, the upcoming tax bills for this autumn and the subsequent spring will remain consistent with the previously frozen rates. But officials have provided a heads-up: by the fall of the following year, regular tax rates will be reinstated.

For more information or if you have any questions, please feel free to contact us.