Question of the Month
March
2006
How many states in
the Midwest have property-tax deferral loan programs for senior
citizens?
Property-tax deferral loans allow
senior citizens, generally those with low to moderate incomes, to use
some of the equity in their homes to pay property taxes. Three states
in the region — Illinois, Minnesota and Wisconsin
— offer such programs.
These programs help senior citizens
remain in their homes by providing loans to pay a portion of the
property taxes they owe. The state often pays the taxes directly to
the appropriate taxing authority and thus becomes the lien holder on
the property. When the property is sold or transferred, the loan is
repaid to the state. Interest rates may vary, but are generally
relatively low — between 5 and 6 percent.
Income ceilings vary among the states,
with the property-tax deferral available in Minnesota to seniors with
incomes under $60,000 per household. In Illinois, homeowners are
eligible for the program if their total income does not exceed
$40,000. In Wisconsin, income is capped at $20,000.
The states have also built in
protections to cover their loans. The Illinois program permits a
maximum deferral, including interest owed and lien fees, of 80 percent
of the taxpayer’s equity in the property. Homeowners can defer
real-estate taxes as well as special assessments on their principal
residence.
Minnesota requires homeowners to have
owned and occupied their home for at least 15 years prior to applying
for a property-tax deferral. In addition, claims against the property,
in the form of mortgages or other liens, cannot exceed 75 percent of
the estimated market value of the property.
Wisconsin’s loan program has the
lowest income threshold in the region, but homeowners are only
required to have lived in their home for six months before applying
for a loan. Property-tax deferral loans cannot exceed $2,500 (in 2004
the average loan was $2,084).
Homeowners can use the loans to pay
their property taxes, special assessments, and interest and penalties
accrued because of delinquent property-tax payments. Outstanding
obligations — including mortgages and liens — cannot exceed
one-third of the assessed value of the home.
For
more information on this or any other public policy issue, please call
630-925-1922 or complete the online
form for research services.
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