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Councilors to try again to shield older residents from effects of gentrification
By adamg on Sun, 01/18/2015 - 1:21pm
City Councilors Bill Linehan (South Boston, South End, Chinatown) and Steve Murphy (at large) will try once again to persuade the state legislature to let Boston residents over 55 who meet certain income requirements defer parts of their property tax until they sell their homes.
Linehan says the matter is even more urgent now that the city has come out with revised property assessments, which he said are really hitting long-time residents of his district hard - he said he himself has seen his quarterly tax bill rise $200 due to the latest assessments.
This will mark the third time the two have sought the legislative authority needed to let Boston grant deferrals to residents over 55 who have lived in their homes for at least ten years and who make below certain levels defer up to 50% of their annual tax bills. The accrued taxes - plus 4% interest - would become due on the sale of the home or the death of the homeowner.
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Comments
Adam. Can you point to the
Adam. Can you point to the exact proposed ordinance, especially the details about income levels?
Or if you are reading this, "theszak", I'm sure you have something to contribute.
Thanks
Anon
In support of theszak
It is amazingly difficult to find actual, enacted, in-force Boston city ordinances on on line, much less proposed ones. Truly an appalling lack of transparency in government.
Copy of their 2014 proposal
Here. They said their proposal this year would be basically the same.
Specifics
I'm a little confused on the specifics, but as written this seems a bit odd.
Eligibility looks fairly narrow:
"To qualify for this deferral, the real estate tax... for the year in question shall have increased by 10 percent over the prior year's real estate tax..."
Is it common for Boston property taxes to bounce around that much?
The interest rate is fixed at 4%. In 1980, the prime rate topped 20%. If there's a fluctuation in rates, does the city plan on eating the loss? Wouldn't it make more sense to peg it to prime?
Section 3 (a) 2: "that the total amount of such taxes due, plus interest, for the current and prior years does not exceed 50 percent of the owner's proportional share of the full and fair cash value of the property"
As written it precludes anyone with an underwater mortgage. This is all well and good, but what happens if there's a big swing in the housing market? Does the full tax bill suddenly become due?
"A lien filed pursuant to this act shall be subsequent any liens securing a reverse mortgage, excepting shared appreciation instruments."
I get that they're trying to make it easy for people to get reverse mortgages, but aren't tax debts usually senior to other obligations?
Since it refers to a level
Since it refers to a level set every year, I'll point out that level is likely $56,000 for this year.
Reverse mortgage and other obligations
How does this work with any other financial obligations linked to the property? I.e. if Grandma Sullivan has a deferral of $50k in taxes but also has a reverse mortgage or other loan which also has claim to the money made by selling to the property, then what? Or more likely - what if the value of the assessed property goes down? Hard to imagine, I know, but at some point property values will go back down again leaving the city uncovered for taxes which should have been paid years prior.
I am sympathetic to the folks who this would cover but I can only too easily picture how this would end up with the city getting screwed out of badly needed taxes down the road.
Hierarchy
I think there's usually an order for the liens - taxes first, then condo fees then mortgages etc.
Reverse mortgages usually dictate there can't be any other debt on the property - as long as the paperwork is filed properly, that shouldn't happen.
However, pretty sure taxes are still first lien- would be impossible for cities and towns to stay on top of it every time someone got a loan on a property.
Assuming your taxes are about 1% of the value of the property, give or take, it would take a pretty extreme situation over a prolonged period of time before the city would lose out on any taxes. The mortgage companies might have an issue with this though since it raises their risk. There is probably some notification required and sign off from the mortgage company before you can do this - if not there should be.
It's a reasonable idea - but like all this - the devil's in the details.
Most mortgages collect your
Most mortgages collect your taxes as part of your mortgage payment. If you start deferring them, the mortgage company will be aware.
To be more specific, Linehan is looking to expand the 41A deferral, which explicitly states:
"any joint owner or mortgagee holding a mortgage on such property has given written prior approval for such agreement, which written approval shall be made a part of such agreement."
that is, the city cannot defer your taxes unless the holder of your mortgage gives written permission.
property tax
Taxation without merit or justification-due to hyper inflated property assessments (40% increase in 3 years for us in SB) crazy..
Cuts both ways
It's pretty cool property values have risen this high if you bought in before the spike and are now thinking of cashing out.
People complain and complain about rising property values but the instant someone wants to stay open late, open a new store, etc the same people fight it tooth and nail on the basis that it will lower their property values.
You can't have it both ways. The proposed ordinance makes sense so long as there aren't loopholes. And given the people proposing this there likely are.
NIMBY about NIMBYs
Well, we can always hope that Paul Berkeley takes advantage and moves to Florida.
Cheap shot
Boston, and Allston, are lucky to have Paul Berkeley,
Shhh He's Trying To Sleep
You must be trolling. A real Paul Berkeley fan would never be up at 11:24 PM.
Time to remind everyone that
Time to remind everyone that those over 65 can already receive these deferrals
http://www.cityofboston.gov/assessing/TaxDeferral.asp
So, this only impacts those from 55-65 .
who fits this category?
I think this was written exactly for Linehan and Murphy, 55-65, owned their houses for 10 years....
Simply our government and tax code
There are already real estate tax exemptions for homeowners, elderly, blind, veterans, financial hardship, and more.
http://www.cityofboston.gov/assessing/Exemptions/resexempt.asp
http://www.cityofboston.gov/assessing/Exemptions/PersonalExemptions.asp
If it was easier to build new housing then real estate wouldn't be so expensive.
http://www.bostonglobe.com/metro/regionals/west/2015/01/18/critics-say-a...
and here are all the comments on this subject from last year - http://www.universalhub.com/2014/councilor-would-let-longtime-non-rich-r...
Tax Deferred, Not Waived.
The taxes have to be paid back at some point. With vigorish. The city has granted some pretty generous tax credits to companies to either locate or remain here. That's money the city won't collect.
I see nothing wrong with this. What is OK for one, should be for another.
Bill Linehan
... bleh. Time for him to retire.
Our founding fathers did not want life long politicians.
Bill Linehan
Billy Linehan has NOT been a life long politician!! He's in his "2nd" term. Thank God that people originally from Southie ... not SOBO ... still have politicians that care!!
Not his second term
He's in his fourth term.