Here’s a rarity: A story that says nice things about Newton from page one of today’s Boston Globe.
Programs like Newton’s are intended to make it easier for retirees to stay in their homes in a state with some of the nation’s highest housing costs and real estate tax bills. But because the programs reduce short-term local tax revenue, few cities and towns publicize the benefit as widely as Newton does.
A unique feature of Newton’s tax deferment program is that the interest rate on tax deferments is adjusted annually to be the lesser of the Federal Bank discount rate for primary credit or the statutory rate of 8%. I docketed this item back at the urging of George Foord and it was adopted by the Board of Aldermen in 2006.
I ran on this issue when I ran for Mayor in 2005 along with zero based budgeting and I was called nuts by Cohen supporters. Politics))))))).
You would be nuts not to take advantage of this program and game the system.
Thanks to Ted’s “unique feature,” you can essentially borrow money from the city at 2% or less (by not paying your multi-thousand dollar tax bill), and then put that money into a zero-risk CD earning say, 2.5% from Capital One or Goldman Sachs. Spread the word!
Even better: move to Marshfield, where they’ll give you that money at 0%!
Michael, the tax deferment program is for seniors on a fixed or modest income. These folks are paying for essentials, not investing in CDs.
Besides, no one’s investing in CDs any more. We’re all streaming our music now 😉
It’s essentially a reverse mortgage. The article mentions an income limit of $6ok but what about net worth limits, which is a better metric of need for retirees since most retirees not working have low income and rely on savings? Like you could have $5M in the bank and still have under $60k of income.
> Putting off tax payments for years — or even decades — could saddle their heirs with huge tax burdens
That’s not accurate–you can’t inherit debt. What could happen though is the tax debt could exceed the value of the Estate and then the City would take everything (house, car, jewelry–anything with market value) and then benefactors would receive nothing but personal effects (e.g. photos, documents, mementos of negligible value).
Instead of speculating, why not just read the qualifications.
For Older Citizens (Clause 41C):
To qualify, a taxpayer:
1. must be over 65 years of age as of July 1, 2017 and
must have primary residence in Massachusetts for ten years and owned property in the state for five years and
2. must have occupied the property as of July 1, 2017 and
3. must have a whole estate (the value of personal property excluding domicile) of less than $42,756 if single, $58,789 if married and
4. must have an income less than $21,378 if single, $32,068 if married, after subtracting an allowable exclusion.
Thanks Marti. This is a great program and the least we can do for our seniors. Given that Village 14 always attracts a handful of curmudgeons, I shouldn’t be surprised by the negative comments here, but I am.
@ Tom Sheff – Tom you were ahead of your time. Never getting the due recognition you so richly deserved!
Good try Marti but you are incorrect. You posted information pertaining to tax exemptions (41C) but the tax deferral program is 41A, which there doesn’t appear to be any asset restrictions.
see http://www.newtonma.gov/gov/assessor/programs.asp
also https://www.mass.gov/files/documents/2018/01/02/dor-proptax-guide-deferrals.pdf
You’re correct. 41C covers senior exemptions, reducing the tax bill; 41A covers senior deferments, pushing the due dates for any real estate taxes due, along with interest accrued, until the house is sold or the owner dies, unless your surviving spouse continues to defer. As of that date, the interest rate goes up to 16%. If 6 months later, the deferred amount has not been paid, the treasurer may petition the Land Court to foreclose the lien on the property.
With the market value of land in Newton continuing to grow, there should be no problem collecting the taxes.
To qualify, a taxpayer:
1 must be over 65 years of age as of July 1, 2017 and
2 must have primary residence in Massachusetts for ten years and owned property in the state for five years and
3 must have occupied the property as of July 1, 2017 and
4 must have a total gross income of less than $60,000 per year.
Gross income (gross receipts) means income from all sources and is broader than taxable income for federal or state income tax purposes.
@Greg, since mine looks like the only comment that could be interpreted as negative, let this curmudgeon be clear:
I support this program 100 percent. I’m simply pointing out that if you’re a senior and your retirement income is less than $60,000 (which I would imagine accounts for the majority of seniors, even in a city like Newton), you would be acting irrationally if you didn’t take advantage of what is effectively a loan from the city at significantly below-market rates.
Even if you had nothing better to do with that money, you could at least stash it away in a risk-free CD, if not put it in a low-risk fund and pretty easily earn twice what the city was charging you.
Of course, offering free or low-cost money like this always opens up a pandora’s box of unintended consequences, but I’d say the city can certainly afford to loan money to its seniors at below-market rates.
I will say that I’m not sure how the interest rate feature docketed by Ted is “unique,” though. I guess you could say that the specific rate offered by Newton is unique, albeit within a range of rates offered by 310 other towns, ranging from 0% to 8%.