David Michael Miller
A few years ago, Rich and his wife were struggling to pay the property taxes on their west-side home where they’d lived for more than 30 years.
They’d already refinanced their house once in order to get some extra money to help with expenses. “After awhile, you can’t just keep redoing the mortgage for some cash,” says Rich, who didn’t want his last name used in the article.
City property taxes for their home are about $5,000 a year. “That’s a whole chunk of our total income, because our only income is Social Security,” he says.
But then they discovered a little-known city program for people in their situation. The “property tax assistance for seniors reverse mortgage loan program” allows seniors to defer paying their property taxes.
Property owners are eligible if they are 65 or older with less than $30,000 in assets and meet income guidelines (currently $52,850 for a single person or $60,400 for two people). When people qualify, a lien is placed on the property, meaning the property taxes will be paid when the owner sells the property or dies and their estate is settled.
The city charges an annual interest rate for the loan — depending on borrowing costs, between 2.5 and 6.5 percent.
The idea behind the program is to help elderly people on fixed incomes “age in place.”
However, the program isn’t particularly well known. Linette Rhodes, grants administrator with the city’s community development division, says that about 20 people a year take advantage of the program. In 2017, the loans averaged $6,000; last year, they averaged about $5,500.
“Most people, once they find out about the program, they are repeat customers,” Rhodes says. “We do get a few new people every year.”
The city advertises the program through the NewBridge senior centers, but the city’s community development director, Jim O’Keefe, admits that there are limited resources for outreach. “It’s been around for quite a long time, but it’s not an actively marketed program,” O’Keefe says.
Although the outreach might be limited, Rich praised city staff for their help with the program, particularly Terri Goldbin, a housing rehabilitation specialist with the city. Rich says his wife has limited mobility so Goldbin brought paperwork to their home to fill out.
Rhodes says people often find out about the program from the county, when they become delinquent on their property taxes (delinquent tax bills are handled by the county, not the city).
Rhodes says the city has about $780,000 in outstanding loans through the program. That’s a tiny fraction of the $242 million in property taxes the city collected this year.
The Madison school district used to have a program where it would give people age 55 and older with incomes of less than $70,000 a year tax credits for volunteering at schools. Not many people knew about or took advantage of the program. In 2016, 25 volunteers received a combined tax break of about $6,000.
The school district discontinued the program in 2017 after determining the Internal Revenue Service considered the income subject to federal taxes.
Rich and his wife have looked at possibly moving into senior housing, but says “some of those rates are really prohibitive for us.”
It’s cheaper for them to stay where they are. “Everything we have is here. We’re going to have to start purging eventually,” he says. “But because of this program, we don’t have to make all these decisions right away.”
