Councilor would let longtime non-rich residents over 55 defer property taxes

Local governments did this all up the coast of Maine where families without a lot of expendable income found themselves living in very valuable homes with high corresponding real estate taxes.

It's a great idea.

Old people get creamed by the property tax hikes for homes they bought for 6 grand in 1965 that have now ballooned in value to a point where it drains their income until they bail, a kind of economic cleansing effect.

It has been rippling through the system long enough to make odd income bracket mono-cultures of places where it takes root.

I guess the question I have is if the city property tax coffers are lessened due to this tax deferment, which it sounds like they would be, who or whom or what is going to make up the loss in tax revenues to the city?

Say the person who owns the home, stays in the home and lives to be 85, that is 30 years of tax deferments, a sizable chunk of revenue for the city.

This is a terrible idea for the city and for homeowners. The city would automatically lose revenue from this which either means the city will have to:

1.) Raise taxes on commercial and residential owners
2.) Cut the city's budget (sorry no pay raise for councilors)

On the real estate market side, someone will have to pay those deferred tax payments once the deed is transferred. If I were buying a house with deferred tax payments accumulating for 20-30 years, I'd say hell no. The same would be true if my parents passed the house down to me. Some families can’t absorb those deferred payments. The ones able to take those costs are most likely going to be investors.

This won’t benefit the other neighborhoods of Mattapan, Hyde Park, and parts of Dorchester either down the line where the market has picked up but not as high or fast as South Boston. Just imagine when we hit the next downward real estate cycle years down the line, how will deferment help the market?

Kicking grandma out of her home because she can't afford the taxes is not a popular nor nice thing to do. At the same time, these types of schemes always lead to perverse economic incentives.

This is really just a scheme to shift tax burden around and benefits basically middle class folks who own. I'm not an expert but there are probably better ways to do that, and there are probably more deserving populations out there as well (e.g., people who can't afford a home in the first place).

No.

If older people are able to pay their taxes now, instead of deferring all their taxes, have them continue to pay the current amount (or maybe the amount they paid 10 years ago) with no future increases. That keeps money rolling into the city and keeps the owner from burning through as much of the future value of the house.

Requiring a means test (which they said they would do) is a key feature. Also, raising the age limit to at least 60 or 62 is a no-brainer.

This basically works like a reverse mortgage would, but with a lower than market rate (and no closing costs). I'm not usually fond of the govt getting into the loan business, but something like this makes sense and in theory is low risk to the city as they'd have a lien on the property upon disposition.

I've seen instances where property taxes are frozen based upon age/income. That could be done here where the owner pays a fixed amount and the excess is deferred.

Age 55 does seem young, but I'm not sure what the "right' age should be.

Why not propose some form of broad-based property tax relief that would be based on affordable housing guidelines? For example, if your housing costs (mortgage+taxes+insurance) exceed 30% of your income, you would be eligible to defer tax payments for a portion owed that would reduce your payment to 30%. Such a proposal would be easy to understand, would not cleave discussion along interest group lines, and would provide measured, immediate relief to those homeowners who need it the most.