There’s no place like home: A review of state and county senior homeowner tax programs in Maryland to promote aging-in-place
Aging-in-place is a strongly held goal for many seniors. It is defined as living independently in one’s privately owned or rented home in the community for as long and as safely as possible regardless of age, income, or ability level [1]. Aging-in-place allows seniors to maintain social networks, independence, and self-determination while also reducing the individual, family, and societal costs incurred from transitioning to an assisted living facility/nursing home [2]. Bridges and barriers to aging-in-place exist within layers of socio-political influence around seniors (Figure 1) [3]. The US Department of Housing and Urban development identifies finances as a key limitation to many seniors’ ability to age-in-place, with those living in low- and middle-income households facing significant barriers to afford aging-related home modifications for safety (like railings, fixing crumbling steps, etc.). To afford such modifications, senior homeowners most often take out federally insured reverse mortgages through the Federal Housing Administration’s Home Equity Conversion Mortgage program (HECM). This program, however, has sustained heavy losses, due to many seniors’ difficulty in paying property tax and insurance expenses [4]. The effect of property tax abatement and subsidy strategies on seniors’ ability to afford aging-in-place is an under-studied strategy to promote home affordability among HECM beneficiaries. As an introductory case-study, this brief describes state and county-level homeowner tax programs in Maryland and outlines areas in their execution for policy evaluators to assess in future studies of senior constituents’ financial ability to age-in-place.
Figure 1: Bridges and barriers to aging-in-place: An ecological systems framework
Overview of state-wide senior homeowner tax credit policies
Though Maryland does not have a senior-specific homeowner credit for state property taxes, seniors are the primary beneficiary of its means-tested Homeowners’ Property Tax Credit Program. Within the last decade, as many as 80% of the credit recipients are age 60+ [5]. The tax credit amount differs across income levels, with the maximum credit allowed decreasing as household credit increases. For the 2021 tax year homeowners were eligible if they:
1. Owned or had a legal interest in the property,
2. Inhabited the property as their principal residence,
3. Had a net worth less than $200,000 (excluding retirement accounts and the property’s value), and
4. Earned an annual combined gross household income less than or equal to $60,000 [6].
Additionally, certain homeowners may be eligible for the Maryland Homestead Tax Credit. eligibility for this credit is assessed once. It is designed to minimize the year-to-year percent increase in tax paid on homeowners’ principal residence by requiring that counties and municipalities limit taxable assessment increases to 10% or less each year.
Overview of county-specific senior homeowner tax credit programs
Senior homeowner tax credit programs in the State of Maryland have varied eligibility requirements, benefits, and application processes. As of 2019, 15 of Maryland’s counties had senior homeowner tax credit programs (Figure 2). This document details senior credit tax programs’ requirements by county (as of 2019).
Figure 2: Counties in the State of Maryland with senior-specific homeowner tax credit policies (2019)
The minimum age requirement ranges from 62 to 70 years old. All but 2 counties (Harford and Queen Anne’s County) use means-testing, with combined gross household income maximums ranging from $40,000 (Baltimore City) to $86,200 (Howard County). Most impose property value maximums (often $300,000). Six have length of residence stipulations. Caroline and Garrett counties require homeowners to have owned property in the county for 15 and 10 years, respectively. In Charles County beneficiaries must have resided in the home for more than 20 years; in Cecil, Frederick, and Harford counties this home residence minimum is 40 years.
Across Maryland, counties employ three senior property tax credit benefit structures:
1. 0% interest tax deferral,
2. Flat percentage discount on county property taxes for up to 5 years,
3. Percent discount county property tax.
In nine counties, applying for the state credit automatically serves as an application for the county credit. Five programs require a separate application. Ten programs have requirements more lenient than state standards. All require homeowners to apply for the credit at some deadline in the calendar year prior to filing their taxes and reapply for the credit every year to re-certify eligibility.
Recommendations
Homeowner tax credit programs are powerful policy tools to create affordable housing and increase older adults’ financial ability to age-in-place. However, aspects of their implementation limit their potential. State and county officials in charge of legislating and administering senior homeowner property tax credit programs could consider to clarifying and aligning the state and county programs’ goals. Depending on the county, these programs have conflicting agendas that incentivize/disincentivize moving to vs leaving to a particular area, prioritize very long-term senior residents vs new senior residents, protect only low-income seniors vs low-to-middle-income seniors, and ease homeownership costs temporarily vs permanently. Conflicting purposes makes it difficult to assess whether or not these tax minimization policies are “working” at the state level.
Establishing clear goals leads to the second consideration to evaluate constituents’ awareness of and access to these programs. The Maryland Access Point and the Maryland Benefits Center [7] are valuable resources for seniors to learn about and apply for the homeowner’s tax credits — in addition to other social services. But anecdotally, many eligible seniors do not know these credits exist [5] [8, 9]. Currently, there isn’t a way to systematically evaluate what percent of eligible seniors apply for and receive these tax credits using publicly available data. Policy makers should consider developing systematic access measures by county, looking particularly for potential disparities by race/ethnicity, age, education level, and urbanicity.
Finally, policy makers could consider formally incorporating current and future aging-in-place financial programs within Maryland’s State Plan on Aging and assessing economic and health-related outcomes. Revised every four years, this plan guides Maryland’s aging service network activities. Currently, the state’s Aging-In-Place initiatives focus on direct service provision via Medicaid community long term programs, senior care, congregate housing, and assisted living facilities [7]. The benefit of public spending on senior homeowner tax credits relative to (or in tandem with) the federal HECM programs other senior-specific community services is has not been studied. In the state plan’s needs assessment, surveyed constituents’ top motivation for planning to leave Maryland was high tax burden; “inadequate savings or income” was the third most-highly endorsed worry that seniors consider as they think about staying independent in their own home as they age. To support the goal of aging in place, state and county policy makers could use this information along with demographic forecasts to decide on indicators of programmatic “success” and assess their financial capacity to continue or expand tax credits and other services — or plan to minimize anticipated shortfalls. Formal integration of homeowner tax credits into the state’s Plan on Aging could lay the foundation for assessments of the credits’ impact on health-related outcomes of interest to the state and its residents (e.g. , use of publicly funded long-term care facilities, percent of saved dollars that seniors re-allocate to food or medications, and financial-related stress).
References
1. National Institute of Aging. Aging in Place: Growing Older at Home. 2020 [cited 12/19/2020; Available from: https://www.nia.nih.gov/health/aging-place-growing-older-home.
2. US Department of Housing and Urban Development. Measuring the Costs and Savings of Aging in Place. Evidence Matters: Transforming Knowledge into Housing and Community Development Policy 2020 [cited Dember 19, 2020; Available from: https://www.huduser.gov/portal/periodicals/em/fall13/highlight2.html#title.
3. Greenfield, E.A., Using ecological frameworks to advance a field of research, practice, and policy on aging-in-place initiatives. Gerontologist, 2012. 52(1): p. 1–12. Available from: https://academic.oup.com/gerontologist/article/52/1/1/692810?login=false
4. US Department of Housing and Urban Development Office of Policy Development and Research., Aging in Place: Facilitating Choice and Independence. Evidence Matters, 2013. Available from: https://www.huduser.gov/portal/periodicals/em/fall13/highlight1.html#:~:text=To%20age%20in%20place%2C%20seniors,self%2Dfinance%20aging%20in%20place.
5. Baumann, D., Get a Property Tax Break: Maryland program offers help for low-income homeowners and renters, in AARP Bulletin. 2012, AARP. Available from: https://www.aarp.org/money/taxes/info-07-2012/property-tax-breaks-md.html
6. State of Maryland — Department of Assessments and Taxation. Homeowners’ Property Tax Credit Program. 2019 [cited December 19, 2020; Available from: https://dat.maryland.gov/realproperty/Pages/Homeowners'-Property-Tax-Credit-Program.aspx.
7. State of Maryland — Department on Aging, 2022–2025 State Plan on Aging. 2016: Annapolis, MD. Available from: https://aging.maryland.gov/SiteAssets/Pages/StatePlanonAging/MD%20State%20Plan%202022-2025.pdf
8. Calvert, S.H., Jamie, Many don’t know about tax break for lower-income homeowners, in Baltimore Sun. 2012: Baltimore, MD. Available from: https://www.baltimoresun.com/business/real-estate/bs-md-homeowners-credit-20120225-story.html
9. Maryland Consumer Rights Coalition. TAKE THE CREDIT: Maryland Homeowner Property Tax Credit. 2020 December 19, 2020]; Available from: https://www.marylandtaxcredit.com/homeowners.
10. Anne Arundel County Maryland. Homeowners Property Tax Credit Program. 2020 12/19/2020]; Available from: https://www.aacounty.org/services-and-programs/homeowners-property-tax-credit-program
11. Baltimore County Government. Homeowners’ and Tax Credit Program. 2019 12/19/2020]; Available from: https://www.baltimorecountymd.gov/departments/budfin/taxpayerservices/taxcredits/homeowners.html.
12. Dunn, A., Baltimore City Council passes low-income senior property tax credit, in The Baltimore Sun. 2016: Baltimore, MD. Available from: https://www.baltimoresun.com/maryland/baltimore-city/bs-md-senior-tax-credit-passes-20160613-story.html
13. Caroline County Maryland. Are there any tax programs that provide tax relief based on income? 2020 [cited 12/19/2020; Available from: https://www.carolinemd.org/Faq.aspx?QID=154#:~:text=This%20credit%20is%20for%20seniors,fill%20in%20the%20county%20forme.
14. Carroll County Maryland. Carroll County Senior Tax Credit Program. 2009 [cited 12/19/2020; Available from: https://www.carrollcountymd.gov/media/2609/senior-tax-credit-application.pdf.
15. Cecil County Maryland. Tax Credits & Exemptions. 2020 12/19/2020]; Available from: https://www.ccgov.org/government/finance/property-tax/tax-credits-exemptions
16. Charles County Maryland. Charles County Seniors Encouraged to Apply for Homeowners Tax Credit. 2011 December 19, 2020]; Available from: http://www.charlescounty.org/webdocs/comm/boardofcommissioners/newsreleases/2011/2011_11_09%20charles%20county%20seniors%20encouraged%20to%20apply%20for%20tax%20credit.pdf.
17. Frederick County Maryland. Senior Tax Credit. 2019 December 19, 2020]; Available from: https://frederickcountymd.gov/7438/Senior-Tax-Credit.
18. Miller, M., More Garrett County seniors eligible for property tax break, in Cumberland Times-News. 2014: Cumberland, MD. Available from: https://www.times-news.com/news/local_news/more-garrett-county-seniors-eligible-for-property-tax-break/article_9ab3843a-dad8-5509-bdaf-379d340b20d8.html
19. Harford County Maryland. Harford County Senior Citizens Tax Credit Application. 2019; Available from: http://www.harfordcountymd.gov/DocumentCenter/View/12705/2019-Senior-Tax-Credit-Application-PDF.
20. Howard County Maryland. Senior Tax Credit. 2020; Available from: https://www.howardcountymd.gov/Departments/Finance/Billing-and-Payments/Real-Property-Taxes/Tax-Credits/Senior-Tax-Credit.
21. Montgomery County Maryland. Montgomery County Senior Property Tax Credit (Senior Tax Credit). 2020 [cited December 19, 2020; Available from: https://www.montgomerycountymd.gov/Finance/senior-credit.html.
22. Queen Anne’s County Maryland. Tax Credits. 2020 December 19, 2020]; Available from: https://www.montgomerycountymd.gov/Finance/senior-credit.html.
23. St. Mary’s County Maryland. Senior Tax Credit Application. 2020; Available from: https://www.stmarysmd.com/treasurer/senior-tax-credit/app/.
24. Washington County Maryland, Resolution regarding the Washington County, Maryland Senior Citizen Supplemental Homeowners’ Property Tax Credit. 2011: Hagerstown, MD. Available from: https://lfportal.washco-md.net/WebLink/DocView.aspx?id=1855&dbid=0&repo=PUB-LF9&cr=1
