Sunday, August 13, 2006

Senior Tax Freeze

From the Asbury Park Press:

Man, 90, dismayed by property taxes

For the last 85 years, Charles Aufiero has called a small brick house on East 11th Street home.

He remembers when the road outside was dirt.

"My whole destiny was to be in this house and take care of my people," said the 90-year-old, who never married.

But when he got his property tax bill in the mail a few weeks ago, Aufiero's days in the family home appeared to be numbered. His tax bill more than doubled, the result of a property revaluation in town.

"I damn near fell through the floor," he said.

For the past week, he has contemplated selling the home and tried to figure out ways to make the numbers work, to stretch out his $700 a month from Social Security.

What he didn't know is that he may be eligible for help from the state.

Seniors who earn less than $40,869 can apply for assistance in the form of a "Senior Freeze" on property taxes. The deadline for applying this year has been extended from Aug. 15 to Oct. 31, State Treasurer Bradley Abelow announced earlier this month.

"I never heard of it," Aufiero said. "That would help a lot."
...
When Aufiero's tax bill arrived, instead of the $548 quarterly tax bill payment he's been accustomed to making for years, his August bill was $1,364.

Aufiero now wonders if there are others out there wrestling with how to cope, unaware help is out there. In Aufiero's case, it took the jolt of a revaluation to spark a hunt for help.
...
Aufiero says he wants to die in the same home his father, Frank, died in more than 30 years ago. A neighbor, Aufiero said, recently offered him $350,000 for his cramped house. He's thought about accepting the offer and moving to a home for veterans. Now, because of the Senior Freeze, Aufiero is feeling hopeful about staying.

"I don't want to go," he said. "I live here. I don't want to move till I die."

32 Comments:

Anonymous Anonymous said...

The senior freeze is a rebate in the amount of the most recent year's tax increase.

In essence, it delays the pain for a year.

jw

8/13/2006 10:18:00 PM  
Anonymous willyboy said...

Not the way I read it. Looks like taxes freeze at the "base year" which is the first year after 1996, where the applicant was 65 or older, provided applicant is below the income limit for that year and for every year thereafter. (apparently if applicant exceeds the income limit in a subsquent year, then the base year resets)

http://www.state.nj.us/treasury/taxation/index.html?propfrez.htm~mainFrame

Looks like you pay the regular tax bill and then apply for reimbursement amount equal to the current bill - base year tax.

8/13/2006 10:44:00 PM  
Anonymous Anonymous said...

Ee-verseray Ortgage-may.

That is my free advice to older long-time home owners who like the capital gains their pile has accrued, but don't want tap into dollar one of that amount to pay the piper.

Listen, Mr. and Mrs. Bought Your House for Five Figures, Could sell It for High Sixes to Low Sevens: Don't expect me to subsidise your windfall. Use the house to pay the freight; I've already got my own burden.

8/13/2006 10:55:00 PM  
Anonymous Anonymous said...

Not the way I read it. Looks like taxes freeze at the "base year" which is the first year after 1996

That's what I thought when I looked into it awhile ago for my 80 year old mom. If you look at the application itself, it only takes into account the difference for the last year.

If I'm mistaken about this, please let me know. My mom's skipping doctor's appointments and medications because of her tax bill.

jw

8/13/2006 11:06:00 PM  
Anonymous Anonymous said...

Ee-verseray Ortgage-may.

Eepcray.

8/13/2006 11:09:00 PM  
Anonymous Anonymous said...

more generational jealously that's based more upon: I want now what took you 30 or 40 years to accumulate and I love it anytime another way surfaces that might make you lose some of it.

8/13/2006 11:32:00 PM  
Anonymous willyboy said...

jw,

I see the application, and I see what you mean. The application conflicts with the definition of the program. I wonder if that application assumes the person is applying the first year that they are eligible (repeat filers receive a different form).

Did you talk to anyone about this or just stop after you read the application? I think there's a chance there's more savings availble than the application suggests.

8/14/2006 12:00:00 AM  
Anonymous Stan said...

This sounds like Prop 13 in California, except that is for everyone. My mother lives in a house that is now "worth" around 500K and her taxes are around $600 a year. Her neighbors who bought more recently pay 10 times that.

I feel badly for people in the situation of being taxed out of thier homes, but on the other hand they did win the equity lottery on thier house, at the cost of all the younger families who would like to buy a home. You can't have the appreciation without the tax.

A better solution is the reverse mortgage, or I would support the state taking all proceeds above the assessed value of the house after it is sold. Better still would be to have a fair tax rate for everyone that was still enough to pay for services.

8/14/2006 07:24:00 AM  
Anonymous Anonymous said...

More friggen cry babies. They like the insnae appreciation but they do not want to pay for it.

8/14/2006 07:55:00 AM  
Anonymous Anonymous said...

Did you talk to anyone about this or just stop after you read the application? I think there's a chance there's more savings availble than the application suggests.

My older brother has been doing her taxes for the past several years. He did some research on the program as well.

I'm going to look into it again. I agree that the definition sounds like a true "freeze".

Thanks!

jw

8/14/2006 08:34:00 AM  
Anonymous Anonymous said...

Anon. 12:32:

It has nothing to do with jealousy; it's about what Anon 11:55 wrote: The craven selfishness that drives seniors to hoard the capital gains on their home, while not contributing their fair share. Instead of looking at income, we need to look at net worth. If a senior has approx $2k/month income but $1 million or more in net worth, they should not be getting tax breaks. Period. There are vehicles--reverse mortgages among them--that allow oldsters to stay in their beloved homes without tapping the wallets of their neighbors. This, as I have said before, is more a matter of won't (as in "hell no, I won't cash in my investment to pay my fair share) than of will.

-Jamey

8/14/2006 08:56:00 AM  
Blogger skep-tic said...

percentage of the population that are senior citizens is rising every year.

how will these cities function when upwards of 1/3 of the population is eligible for these tax breaks?

8/14/2006 09:03:00 AM  
Anonymous Anonymous said...

Maybe property tax is a bad system. How about a "residence tax", which would be a percentage of median income for an area. This would be a more fair way to pay for services and it wouldn't use a bubbly asset price as its indicator.

8/14/2006 09:20:00 AM  
Anonymous Anonymous said...

Jamey,

Just curious - what do you think of the estate tax?

8/14/2006 09:59:00 AM  
Anonymous Anonymous said...

Jamey -
I find it patently unfair of your labeling of seniors who want to stay in thier homes as greedy. The gentleman who was the main focus of this article has lived in his home for 85 years!! He not "hoarding equity" - he desires to stay in the only place he's known as home his whole life.

I find it appalling that this level of venom came out towards this old man in the predicament.

8/14/2006 10:35:00 AM  
Blogger delford said...

I find it disgraceful that we are blaming the seniors, who by the way use much less in services, than those with children.

If we are going to make them pay, then we should also make the people that use more of the services pay more, as in the schools, and in aprticular special ed.

And in particular. it is the parents today who are crying my kid need this, my kid needs that you have to provide it etc. etc.

Is that fair to the people that are not using more than their fair share of the schools services?

8/14/2006 11:04:00 AM  
Anonymous Anonymous said...

Delford:

Whether or not one has kids in school at the time, EVERYBODY in town benefits from the school system. A stable school system is part of what sustains property values--more often than not, a school system in decline precedes the overall decline of a municipality. And I'm getting a bit tired of the "I don't need it, so I won't pay for it" mentality when it comes to municipal services.

RE: this pay-as-you-go argument: If my neighbor's home was robbed, should he or she pay more for law enforcement? (Not insurance; that's a different matter.) But since I didn't need to call the cops, should my taxes be lower than my neighbor's?

Estate tax? I think it's fair in its current incarnation. The whole "death tax" meme is very canny as marketing, but utterly empty as a practical argument. Just don't get me started on the AMT...

Anon. 11:35. The gentleman in question likely has the means to pay his taxes: his home equity. He just chooses not to avail himself of it. That, to me, is selfish. Sorry you found my post "venomous," but facts is facts... You want the thrills, you gotta pay the bills. My ma is selling off stocks to stay in her home. That's what she invested for during her working years: To permit her to sustain her standard-of-living in retirement. (Now if she'd just update the NFL bedspread in my bedroom...) A reverse mortgage woule enable the gentleman in the article to stay in his home without unfairly burdening his neighbors. He might not be able to leave as big a pot to his kin, but then, every choice one makes has its consequences.

Not "venomous," just realistic. Sorry you saw it that way.

-Jamey

8/14/2006 11:37:00 AM  
Blogger chicagofinance said...

This comment has been removed by a blog administrator.

8/14/2006 11:44:00 AM  
Blogger chicagofinance said...

Before this thread gets too huffy, I checked with the Tax Director CPA in my practice.

The skinny?

The provision is a "freeze". You pay the taxes every year, and then you apply for the refund that reimburses the individual the difference between the actual taxes and the freeze level.

The rub?

The $40,869 include ALL INCOME, TAXABLE OR NOT. She says it is REALLY difficult to maintain such a low income year after year. The people who receive this benefit, by definition, are going to be very small in number and also truly living on modest means.

I am not endorsing this Senior Freeze, but it is also not an en masse handout either.

I appears to be just another method to gain votes through the wallet.

8/14/2006 11:46:00 AM  
Blogger delford said...

Nor everyone benefits from the school syatem equally, and the boogey man of you better pay or your property values will go down, its the excuse used for out of control rampant spending.


I suggets you go to a school board meeting and see what I am talking about.

I am all for stable schools, but this spend more cause our houses will be worth more is a fallacy. When you have school board that can get voters to approve massive additions to existing schools, without having a clue as to what the impact will be on the poerating budget is in my mind amazing, but it is exactly what has happened in my town.


Now that peopl are waking up to the fact, its too late, constuction has started, and the town is in an uproar.

If the average cost lets say to educate a child is 7K a year but the cost for some one in special ed is 10k a year, than you can see that nto all are paying theri fair share, and monies that could be used for programs for all, or to keep taxes form rising are spent elsewhere.


its ironic, the towns will say we need to kepp our schools good, so we can atract young families with children, well guess what when the average tax bill is pusing 10K a year, those young families will not be able to afford to live there.

8/14/2006 12:08:00 PM  
Anonymous Anonymous said...

reverse mortgage means sticking your surviving relatives with the bill!
real good idea, fools!

8/14/2006 12:25:00 PM  
Anonymous Anonymous said...

Chicago,

The provision is a "freeze". You pay the taxes every year, and then you apply for the refund that reimburses the individual the difference between the actual taxes and the freeze level.

Is the freeze level pegged at the initial year the individual qualifies as the program definition implies, or is it just the difference between current year's taxes and the previous year's taxes as the application implies?

Thanks in advance!

jw

8/14/2006 12:27:00 PM  
Blogger skep-tic said...

why don't we just abolish all taxes? everyone can fend for themselves. Private schools, private roads, private security, private trash pickup, private wells.

the point here is that most people recognize the need for some level of public goods/services.

I'm sure many people feel like they give more than they get at some point in their lives, but you've got to look at it over the long term.

This 90 yr old gentleman probably went to public school in this town. His kids and likely his grandchildren and maybe even his great-grandchildren went to school there too.

His safety and possessions have been protected by the town's police for nearly a century.

He probably saw town swers and running water put in. They paved the road in front of his house.

How much was all of this worth? Do you honestly think that he really "paid" for all of it? Why should someone who has benefited so much from this town's development be excused from maintaining it now?

8/14/2006 12:55:00 PM  
Anonymous Anonymous said...

That's plain silly: I go to plenty of school board meetings, Delford, and the missus is on the Home/School assoc directory. Matter of fact, folks in my town are downright activist about their kids' schools--which at least helps corroborate my good schools/good towns "hypothesis." No, not everybody benefits equally, but not everybody benefits equally from other municipal services, either. My neighbor puts way more trash out on the curb than I do; we both pay the same share of taxes for municipal hauling. (I eat *my* pizza crusts, so why should I have to pay for people who just throw them away...) I don't put nearly as great a burden on our law enforcement resources as my neighbor with six nogoodnik kids; yet we pay the same (percentile) share for police services.

I get a bit rankled when my elder neighbors--ESPECIALLY the ones who've already put their kids through our towns schools--start carping about rising taxes. Pay the freight, people. Don't wait 30 years to suddenly decide that schools aren't worth the money. Over that same period of time, many homes have gone up 1000-2000 percent in value. Surely good schools did not get in the way of that windfall... Please put some of those gains to good use (other than $300 jeans).

Reminds me of a radio ad I used to hear as a kid: "You've done so much for your home. Now it's time for your home to start doing for you."

Again: Everybody benefits from a strong school system. Equally? Hey, this ain't RUSSIA!

-Jamey

8/14/2006 12:57:00 PM  
Anonymous Anonymous said...

Call the seniors greedy if you will. In fact, write your thoughts down. It will make good reading in the future.

Your day will come!

8/14/2006 01:14:00 PM  
Blogger skep-tic said...

why is it impossible for seniors to be greedy? do people reach some exalted state once they cross age 65?

8/14/2006 01:19:00 PM  
Blogger chicagofinance said...

Is the freeze level pegged at the initial year the individual qualifies as the program definition implies, or is it just the difference between current year's taxes and the previous year's taxes as the application implies?
jw

I apologize, but I need to write this disclaimer. I am not holding myself out as a tax practitioner and I strongly suggest that you perform your own due diligence, including research and seeking out professional tax advice.

OK
The initial/freeze year.

8/14/2006 01:30:00 PM  
Blogger delford said...

anon: Well I am in one of the what is considered better school districts, the whole Blue Ribbon etc., and I can tell you there is minimal attendance at school board meetings where I am.

I believe the seniors as well as everyone else has the right to say hey wait a minute, how much is enough, when does it stop.

Because at the end of the day, you can have all the bells and whistles you want, but parental involvement is key.

Its ironic that one of Bergen Co's best school districts, and one of its most affluent towns voted down a massive school expansion plan, a few years ago. The residents laughed at the school board, a group of them got together, attended the mettings, educated the residents, and the project was defeated and then a new one for 60% less was approved, and guess what the schools are still excellent.

The difference with that town is you have a savvy educated populace, who can question and challenge. They are not afraid to be prudent. There are other towns whose baord members are clueless, and it shows.

8/14/2006 01:33:00 PM  
Anonymous Anonymous said...

Chicago,

Thank you!

I'm off to find a good tax accountant...

jw

8/14/2006 01:45:00 PM  
Anonymous Anonymous said...

I believe you are talking about
Closter, where the taxes are
out of site.

Its no wonder the taxpayers have
had enough.

8/14/2006 05:25:00 PM  
Anonymous Anonymous said...

I guess its save to say that
Mills corp. will not be
running the project in the
meadowlands, after todays news.

My, My, NJ has done it again.

8/14/2006 05:41:00 PM  
Anonymous Anonymous said...

> I would support the state taking all proceeds above the assessed value of the house after it is sold.

Is the tax help really forgiven? This is not the way it is e.g. handled in Minnesota: Here, the state pays property taxes above 3% of poor seniors' income but puts the paid amount as a tax lien on the house, due after both spouses are out of the house.

8/14/2006 10:02:00 PM  

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