Dear Massachusetts Citizen,
Citizen Information Service receives many inquiries from senior citizens
regarding tax deductions on their property tax bills. By state law, exemptions
or deferrals are allowed to those qualified primarily from among seniors,
surviving spouses, minor children of deceased parents, veterans, and the
blind. This booklet is intended to answer questions for those individuals
interested in lessening their tax responsibilities. Included in this updated
version are the very latest changes in tax laws for the past two years,
offering the possibility of both a tax reduction and income tax credit
for property taxes paid by seniors.
I hope the publication presented becomes a valuable aid in understanding the benefits which may be available to you.
William Francis Galvin
Secretary of the Commonwealth
If you are an older citizen, surviving spouse - husband or wife - or minor whose parent is deceased, you may be more vulnerable than most citizens to high property taxes.
Fortunately, there are programs to help you meet your tax obligations. These programs, which provide either property tax exemptions or a deferral of taxes, are set forth in different clauses of Chapter 59: Section 5 of the Massachusetts General Laws. Those specifically geared for you are variations of Clause 17 or Clause 41 or the Clause 41A tax deferral.
With revaluation of property at full and fair cash value, most people found that they could no longer meet the eligibility requirements of Clause 17 and Clause 41 exemptions. Aware that this situation had arisen, the legislature enacted statutes which created alternative exemptions to the Clause 17 and Clause 41 exemptions. These clauses - Clause 17C, Clause 17C1/2, or Clause 17D, and Clause 41B or Clause 41C - are available to those whose cities and towns have accepted them.*
This booklet describes the exemptions under the variations of Clauses
41 and 17 the one deferral available to the elderly, Clause 41A.
*Acceptance by a city or town means approval by the town meeting in a
town, the city council subject to the provisions of the city charter in
a city and the town council in a municipality having such form of government.
All cities and towns are subject to the provisions of Clause 17 and Clause
41 unless they have accepted a more recently enacted clause. When they
accept such a clause, the provisions of the clause which was in effect
are no longer applicable.
For more information on all exemption and deferral clauses, contact your
local assessor.
Age and Status
Clauses 41, 41B, and 41C
Ownership and Occupancy
Clauses 41, 41B, and 41C
You must have owned and occupied as principal residence any real property
in Massachusetts for five years including ownership and occupancy of present
property on July 1 in the year of application. Massachusetts must have
been your place of domicile for the preceding ten years. A surviving spouse
inheriting the property must have occupied the property for five years.
Real Estate and Personal Property
Clause 41
Total worth may not exceed one of two options.
Option 1 allows a total worth of $17,000 for a single person or $20,000 for a married couple, excluding assessed value of domicile as of July 1 in year of application.
Option 2 allows a total worth of $40,000 for a single person or $45,000 for a married couple, including the assessed value of the domicile. If there is joint ownership with a person not a spouse, the whole estate, real and personal, of each joint tenant or tenant in common must be less than $12,000 for a single person or not exceed $15,000 if married, including the assessed value of the domicile.
Clause 41B
For a single person who is a sole owner or a joint owner who shares ownership
with other person(s), total worth cannot exceed $20,000, (if married -
$23,000) excluding the value of the domicile as of July 1 in the year
of application. The portion, if any, which produces income must be included.
Clause 41C
For a single person who is a sole owner or a joint owner who shares ownership with others, total worth should not exceed $28,000 (if married - $30,000), excluding assessed value of domicile as of July 1 in the year of application. Only the portion, if any, which produces income and exceeds two dwelling units must be included.
Income Eligibility
Clause 41
For single person - less than $6,000
For married couple - less than $7000
Clause 41B
For single person - less than $10,000
For married couple - less than $12,000
Clause 41C
For single person - less than $13,000
For married couple - less than $15,000
You may deduct the minimum annual social security payment* from your gross income receipts if your gross receipts include payments from social security, railroad retirement or a federal, state, county, municipal or district retirement or pension plan. Ordinary business expenses and losses may be deducted from gross income receipts, but not personal or family expenses.
*The minimum annual social security payment rate changes yearly. It is determined by the Department of Revenue and is available from your Board of Assessors.
Joint Ownership
Joint ownership with persons not your spouse. If you or you and your spouse own property jointly with other person(s), you may apply for that portion of the exemption which corresponds to the proportion of the property that you or you and your spouse own. However, unless each joint owner meets the requirements for income and total worth for a single person or married couple, whichever is applicable, no joint owner is eligible.
If you are unable to qualify for an exemption under any of the clauses described in previous pages, or if these exemptions do not help you enough in paying your real estate taxes, you might consider applying for a tax deferral under Clause 41A. A deferral permits you to delay payment on property taxes.
If you qualify for a Clause 41A tax deferral, you enter into an agreement with your local assessor to defer payment of all or part of your taxes plus eight percent interest up to fifty percent of your interest in the property valuation.
Taxes in every year may be deferred until you reach a point where the unpaid taxes plus interest due are equal to fifty percent of your interest in the property at full and fair cash value. When that point is reached, although you may no longer defer payment on current and future taxes, the unpaid taxes and interest to date together with interest which will continue to accrue on the unpaid taxes may remain unpaid until the property is sold or until one's death. Upon one's death the deferral may be continued by your surviving spouse, if he/she qualifies, or the taxes may be paid by your heirs or your estate. You can, of course, repay total deferred taxes at any time before then. Upon your death, if your surviving spouse does not continue to defer, or if the property is sold prior to your death, the interest rate goes up to sixteen percent, and the taxes must be paid in order to release the lien that was placed on the property while there were unpaid deferred taxes. If the taxes are not paid within six months of death or sale, the local treasurer may seek to foreclose the lien on the property if the deferred amount remains unpaid.
Age and Status
Ownership and Occupancy
Applicant(s) must have owned and occupied as your domicile any real property in Massachusetts (including present property) for five years. Massachusetts must have been your domicile for the preceding ten years.
Real Estate and Personal Property
Not applicable.
Income Eligibility
From all sources in calendar year preceding year in which application
is made, not to exceed $20,000. A community may adopt a higher maximum
qualifying gross receipts amount but such amount shall not exceed $40.000.
A surviving spouse inheriting property must have occupied it or other
real property for five years. The surviving spouse who otherwise qualifies
may choose to continue to defer taxes. However, the total of taxes deferred
by both spouses together with interest thereon may not exceed fifty percent
of their interest in the property valuation.
Payment of a deceased spouse's deferred taxes shall not be required during the life of a surviving spouse of any age who inherits the property and who enters into a tax deferral and recovery agreement.
If you or your spouse own property jointly with other individuals you may apply for the deferral. The deferred taxes with interest at eight percent in this case are not to exceed one half of the full and fair cash value of the proportion of this property owned by you or you and your spouse.
Contact your local Board of Assessors for an application form. You must apply each year for an exemption or deferral. Generally, you can receive only one exemption, so submit the application for the exemption which will provide the greatest benefit. However, since Clause 41A is a deferral of taxes, you may use a Clause 41A deferral in conjunction with an exemption for which you qualify.
Applications under Clause 41, Clause 41A, Clause 41B or Clause 41C must
be filed with your local Board of Assessors on or before December 15 in
each year. If the actual, not preliminary, property tax bill is mailed
after September 15, you have three months from the date the bill is first
mailed in which to apply. In the year of local acceptance of Clause 41C
the community allows an additional 45 days from the date of acceptance
to apply unless a later date for applying is allowed by another statute.
In addition to your local Board of Assessors, your local Council on Aging
may be able to help you fill out the forms. Some councils employ tax specialists
to provide such assistance.
Joint Ownership
If two or more people own property each can apply, and if the person is qualified, each will be entitled to his or her exemption. Consult your local Board of Assessors.
If you are unable to qualify for an exemption under any of the clauses described in previous pages, or if these exemptions do not help you enough in paying your real estate taxes, you might consider applying for a tax deferral under Clause 41A. A deferral permits you to delay payment on property taxes.
If you qualify for a Clause 41A tax deferral, you enter into an agreement with your local assessor to defer payment of all or part of your taxes plus eight percent interest up to fifty percent of your interest in the property valuation.
Taxes in every year may be deferred until you reach a point where the
unpaid taxes plus interest due are equal to fifty percent of your interest
in the property at full and fair cash value. When that point is reached,
although you may no longer defer payment on current and future taxes,
the unpaid taxes and interest to date together with interest which will
continue to accrue on the unpaid taxes may remain unpaid until the property
is sold or until one's death. Upon one's death the deferral may be continued
by your surviving spouse, if he/she qualifies, or the taxes may be paid
by your heirs or your estate. You can, of course, repay total deferred
taxes at any time before then. Upon your death, if your surviving spouse
does not continue to defer, or if the property is sold prior to your death,
the interest rate goes up to sixteen percent, and the taxes must be paid
in order to release the lien that was placed on the property while there
were unpaid deferred taxes. If the taxes are not paid within six months
of death or sale, the local treasurer may seek to foreclose the lien on
the property if the deferred amount remains unpaid.
Age and Status
Ownership and Occupancy
Applicant(s) must have owned and occupied as your domicile any real property in Massachusetts (including present property) for five years. Massachusetts must have been your domicile for the preceding ten years.
Real Estate and Personal Property
Not applicable.
Income Eligibility
From all sources in calendar year preceding year in which application
is made, not to exceed $20,000. A community may adopt a higher maximum
qualifying gross receipts amount but such amount shall not exceed $40.000.
A surviving spouse inheriting property must have occupied it or other real property for five years. The surviving spouse who otherwise qualifies may choose to continue to defer taxes. However, the total of taxes deferred by both spouses together with interest thereon may not exceed fifty percent of their interest in the property valuation.
Payment of a deceased spouse's deferred taxes shall not be required during the life of a surviving spouse of any age who inherits the property and who enters into a tax deferral and recovery agreement.
If you or your spouse own property jointly with other individuals you may apply for the deferral. The deferred taxes with interest at eight percent in this case are not to exceed one half of the full and fair cash value of the proportion of this property owned by you or you and your spouse.
Contact your local Board of Assessors for an application form. You must apply each year for an exemption or deferral. Generally, you can receive only one exemption, so submit the application for the exemption which will provide the greatest benefit. However, since Clause 41A is a deferral of taxes, you may use a Clause 41A deferral in conjunction with an exemption for which you qualify.
Applications under Clause 41, Clause 41A, Clause 41B or Clause 41C must be filed with your local Board of Assessors on or before December 15 in each year. If the actual, not preliminary, property tax bill is mailed after September 15, you have three months from the date the bill is first mailed in which to apply. In the year of local acceptance of Clause 41C the community allows an additional 45 days from the date of acceptance to apply unless a later date for applying is allowed by another statute.
In addition to your local Board of Assessors, your local Council on Aging may be able to help you fill out the forms. Some councils employ tax specialists to provide such assistance.
Joint Ownership
If two or more people own property each can apply, and if the person is qualified, each will be entitled to his or her exemption. Consult your local Board of Assessors.
Clause 17 exemptions are geared to older citizens, surviving spouses
of any age and to qualified minors who have a deceased parent. Senior
citizens who are 70 and over and who ineligible for one of the Clause
41 exemptions may qualify for one of the Clause 17 exemptions due to no
income limitations.
*Acceptance by a city or town means approval by the town meeting in a
town, the city council subject to the provisions of the city charter in
a city and the town council in a municipality having such form of government.
All cities and towns are subject to the provisions of Clause 17 and Clause
41 unless they have a accepted a more recently enacted clause. When they
accept such a clause, the provisions of the clause which was in effect
are no longer applicable.
Age and Status
Ownership and Occupancy
Those 70 years of age, as defined above, must have owned and occupied the property as domicile in Massachusetts for not less than ten years for not less than five years, Clause 17D, and must own and occupy the property on July 1 in the year of application.
A surviving spouse or qualified minor must be the present owner and occupant.
Real Estate and Personal Property
Clause 17
A person may have a total worth of $20,000, including the assessed value
of the said domicile effective July 1 in the year of application. Any
unpaid mortgage balance on that property is excluded. Clause 17C
A person may have a total worth of $40,000, excluding up to $60,000 of
the assessed value of the domicile as of July 1 in the year of the application
and any unpaid mortgage balance on that property.
Clause 17C 1/2
A person may have a total worth of $40,000, excluding up to $150,000 of the assessed value of the domicile as of July 1 in the year of the application and any unpaid mortgage balance on that property.
Clause 17D
A person may have a total worth of $40,000, excluding the assessed valuation of the domicile as of July 1 in the year of the application. Only the portion which produces income and which exceeds two dwelling units must be included. Any unpaid mortgage balance on that property is excluded.
Income Eligibility
Yearly income is not considered in determining eligibility for Clauses
17, 17C, 17C 1/2 or 17D.
Contact your local Board of Assessors for an application form. You must apply each year for an exemption or a deferral. Generally, you can receive only one exemption, so submit the application for the exemption which will give you the greatest benefit. However, since Clause 41A is a deferral of taxes, you may use a Clause 41A deferral in conjunction with a tax exemption for which you qualify.
Applications under Clauses 17, 17C, 17C 1/2, or 17D must be filed with
the Board of Assessors on or before December 15 of each year. If the actual
(not preliminary) property tax bill is mailed after September 15, you
have three months from the date the bill is first mailed in which to apply.
In addition to your local Board of Assessors, your local Council on Aging
may be able to help you fill out the forms. Some councils employ tax specialists
to provide such assistance.
Joint Ownership
If two or more people own property, each of whom is entitled to a different exemption, each can apply and if the person is qualified, each will be entitled to his/her exemption. Consult you local Board of Assessors.
In addition to the deferral and exemptions already described, there are several other kinds of property tax exemptions under Massachusetts General Laws, Chapter 59, Section 5:
Clause 18 exemptions are for persons who, because they are aged, infirm and poverty-stricken, cannot make full or partial payment of their property taxes. The decision to grant a Clause 18 exemption is made solely at the discretion of the assessors.
Varieties of Clause 22 exemptions are available for certain categories of veterans and their families.
Clauses 37 or 37A exemptions are available to a blind person.
A Clause 42 exemption is available for a surviving spouse of a police officer or firefighter killed in the line of duty.
A Clause 43 exemption is available to minor children of a police officer or firefighter killed in the line of duty.
If you think you qualify for any of these exemptions, you may file an application with your local Board of Assessors.
Elder Volunteer Property Tax Work-Off Law
Under Chapter 59, Section 5K of the Massachusetts General Laws, amended
by Chapter 127, Section 59 of the Acts of 1999, cities and towns may,
beginning 7/1/99, provide residents over age 60 with a local property
tax reduction, up to $500, in exchange for volunteer services. The amount
of the tax reduction is not subject to personal income tax. Elder volunteers
are considered public employees when volunteering, and there are no income
or asset limitations for participation in the program. Volunteers can
work at a rate of $5.25 per hour, which will go toward their tax bill.
For more information, seniors should contact their local tax assessor's
office.
Tax Credit for Low and Moderate Income Seniors
Beginning in tax year 1/1/2001, a new income tax program will go into effect to help eligible seniors reduce their property tax even further. Chapter 127, sections 80 and 81, of the Acts of 1999 (the FY 2000 State Budget) instituted a new tax credit program to assist low and moderate income seniors in paying property taxes and utility charges. Under this program, eligible homeowners and renters can receive a refundable credit on their state income taxes, when they file state income tax returns in 2002 (for the previous taxable year).
To qualify for the credit, a person must be at least 65 years of age, occupy the property as his or her principal residence, and have had an income below a prescribed ceiling amount for the relevant calendar year. The initial ceiling amounts defined in the legislation are $40,000 for a single individual not head of a household, $50,000 for a head of household, and $60,00 for husband and wife filing a joint return. In addition, the assessed valuation of the residence cannot exceed $400,000.
The amount of the credit a qualifying person is entitled to is the amount by which the taxpayer's property taxes, together with the eligible amount of that taxpayer's water and sewer charges, exceed 10 percent of the taxpayer's income. For communities that included water and sewer debt service in their property tax assessments pursuant to MGL Ch. 59 S. 21C(n), the eligible amount of water and sewer charges is the sum that taxpayer paid as part of his/her tax bill for water and sewer debt service. For other communities, the eligible amount for each taxpayer is 50 percent of the water and sewer charges in the tax year for which credit is sought.
A taxpayer may not necessarily receive the full amount by which property taxes and utility charges exceed 10 percent of income, however. Rather, the legislation imposes limits on the credit amount. It also phases in the amount of the credit. In the initial year of the program (for the tax year beginning 1/1/2001), that maximum is $375. The maximum increases in subsequent years to $750.
A senior who rents his/her domicile may also qualify for an income tax credit under the new legislation. The program entitles a senior who rents his/her home to a credit if 25 percent of that senior's rent exceeds 10 percent of his or her income, again up to the statutory limits. A renter whose rent is subsidized by the state or federal government through rental assistance programs, however, does not qualify for this benefit.
Seniors who are not obliged to file a state income tax return because they do not owe taxes may, nevertheless, obtain a credit. To do so, however, they must file a return.
The legislation contains language which automatically increases both the benefit amount and the eligibility limits in future years. The income, valuation, and credit limits adjust automatically in synchrony with the Consumer Price Index.
Please call the Dept. of Revenue's Division of Local Services for more information about this program: (617) 626-6367 or 1-800-392-6089.
If your application for any of the tax exemptions or the tax deferral described in this publication is denied, except in the case of Clause 18, you may appeal to:
State Appellate Tax Board
399 Washington Street, 10th floor
Boston, Massachusetts 02108
Telephone: (617) 727-3100
Facsimile: (617) 727-6234
Your local Board of Assessors should be able to answer any questions you may have. If not, please contact:
Massachusetts Department of Revenue
Property Tax Bureau
51 Sleeper Street
Boston, MA 02210
Telephone: (617) 626-2300
Facsimile: (617) 626-2330