Town uses tax ‘burden shift’ to aid senior homeowners

Mass Innovations, From the Beacon, April 2014

For many seniors, owning a home in an affluent suburb can be a mixed blessing. While they may have paid off their mortgages years or even decades ago, their property-tax payments can be staggering. In more than a dozen Boston-area towns, including Sudbury, the average annual tax bill for a single-family home is more than $10,000.

Many senior homeowners are eligible for the state’s “circuit-breaker” tax credit, which can reduce their annual tax payments by more than $1,000. But for many years, Sudbury officials had been seeking ways to further relieve the tax burden on seniors.

In late 2012, they succeeded. Town Meeting ratified a home-rule petition that enabled the introduction of a local tax exemption for seniors.

Previous attempts, whether they failed to gain Town Meeting approval or were shot down by the Legislature, lacked a clear means-testing provision, according to Town Manager Maureen Valente.

In creating the successful legislation, the town proposed a “burden shift” – a small property-tax increase for homeowners in general that would be used to provide tax relief for eligible seniors.

“It’s part of a broader goal to retain seniors in town,” Valente said. “Those who have reached that age, they are on pensions, fixed-incomes. How could we entice them to stay in the community?”

The program that emerged enables the town to raise property taxes for all taxpayers by up to one-half of 1 percent in the first year and up to 1 percent in subsequent years. As a result, a homeowner with a $6,000 annual tax bill would pay an additional $30 to fund the senior tax exemption in the first year and $60 in subsequent years.

The reduction in property taxes for the 118 participating seniors ranged from less than $1,000 to more than $5,000, with a median reduction of roughly $2,500.

A key element of the plan “is that it avoids having the program compete with other town priorities, such as school expenses,” according to a report the town issued in February. “The burden shift occurs outside of the budget process; it takes place outside the process by which the Selectmen determine property tax rates of the various classes of property.”

To be eligible, homeowners must be at least 65 and have lived in the town for at least a decade. The residency requirement reflected sentiment that community members “wanted to invest in the people who were living in the community and have been here a long time,” Valente said.

Roughly half of the program’s participants are 80 or older, according to town officials.

While the eligibility requirement is similar to the state’s circuit-breaker program, only about half of Sudbury’s roughly 240 homeowners eligible for the circuit breaker also applied for the new means-tested tax exemption. Valente said she expects the number to grow once the program becomes better understood.

For more information, contact Maureen Valente at (978) 639-3382.