Property Tax Savings for Seniors: What They Should Know

By Tamarind Phinisee, NDG Contributing Writer

Property tax relief for seniors has been the topic of nationwide debate for quite some time. But the debate has picked up steam in the past few months in places such as Washington, DC and Pennsylvania, in an effort to keep seniors from losing their homes and to provide them with property tax relief.

This same issue is now at the center of the mayoral race for the city of Irving.

Mayoral candidate Herb Gears’ platform focuses on increasing awareness about existing property tax relief already available to those aged 65 and older. Gears – who served as mayor for the city of Irving for six years from 2005 to 2011 – is running against current Mayor Beth Van Duyne.  Earlier Gears served as an Irving city councilman from 1998 to 2004.

Property tax relief for the community’s seniors is an important issue to Gears, who says seniors are large contributors within the community via philanthropy, volunteering, voting and other efforts. Gears believes that making sure seniors are aware of the property tax relief available to them is a way to give back to Irving’s seniors.

“Who’s better for Irving? They’re consuming and polluting less and everywhere I go all the volunteers are seniors,” Gears says. “Seniors are the core component of this city. We need to take a pause and say, ‘Let’s use some of our resources to make life better for seniors in Irving while they’re still alive.’”

To help ensure the seniors are aware, Gears has mailed out forms about existing property tax relief to every Irving resident who is age 65 or older.

Property tax relief has actually been in place in Texas since 1979 when the Texas Property Tax Code was passed into law via the legislature. The bill, among other things, called for the creation of Central Appraisal Districts to oversee and ensure fair, equitable and accurate property taxation.

This law, and subsequent amendments, provides homeowners with property tax relief in the form of exemptions – which remove or reduce part of the value of the property from taxation, thereby lowering his or her property tax bill.

As such, all homeowners can seek an optional residence homestead exemption from all taxing authorities. It is optional in that each taxing authority – the county, the city, the school districts, the community college districts, the hospital, etc. – has the right to grant or deny approval. Each of these taxing authorities sets their own tax rates, which they send to the tax assessor’s office. The tax assessor’s office then calculates the property taxes owed. For more information, visit the Dallas County Appraisal District’s (DCAD) website www.dallascad.org.

Those aged 65 and older can also seek approval for two additional forms of relief in addition to the residence homestead exemption. These are:

• The Age 65 and Older Homestead Exemption; and
• The Tax Deferral for 65 or Older or Disabled Homeowner. Both exemptions help reduce property tax costs. While those who are disabled can also receive similar exemptions, this story focuses on those aged 65 and older.

Breaking down the numbers

At the Dallas County level – the jurisdiction under which the city of Irving falls – homeowners could receive a 20 percent reduction in the value of their property. If granted, an individual with a home valued at $100,000 would then pay taxes on $80,000. If this homeowner is age 65 or older, he or she could also qualify for an additional reduction on the value of the property at the county level of $69,000. If granted, county taxes for this individual would then be owed on the property’s remaining taxable value of $11,000. Those 65 or older could also apply for further exemption through tax deferral on this remaining taxable value. If granted, they would not pay taxes for as long they owned their home or until they passed away.

Under the tax deferral exemption, however, taxes and interest on the property would continue to accrue and would need to be paid if the homeowner passed away or from funds from the sale of the property if the homeowner moved.

Based on data provided by DCAD, city of Irving spokeswoman Susan Rose says there are more than 8,700 individuals in Irving – both 65 or older OR disabled – who would qualify for the tax deferral exemption.

“If all residents 65 and older are granted a property tax deferral, that would total a $5.2 million decrease to the City of Irving general fund budget each fiscal year,” Rose says. “In addition, under the law, those electing this option will be charged an interest rate of 8 percent per year on all deferred taxes. Upon sale of the house, all deferred taxes and interest will be due.”

This decrease in budget, Rose says, would either have a corresponding reduction of $5.2 million in services to Irving residents or a 3 cent increase in the tax rate which equates to five percent of the total tax rate.

“Both of these options are available under state law. City Council would respond appropriately to any necessary budget adjustments,” Rose said.

Naturally, taxing authorities will be resistant to the idea of widespread awareness of the exemption options available to taxpayers. But Gears says the $5 million in revenue the city currently receives from seniors reflects less than three percent of the total budget. With a focus on eliminating budgetary waste and re–evaluating priorities, Gears says, the city likely could replace the funds without such strong measures being necessary.

The Tax Deferral option was created in an effort to save the homes of seniors unable to afford the property taxes on their home in their golden years. After a lifetime of contributions to the country and their community, Gears says, seniors are often on a limited/fixed income, making the annual tax bill a considerable challenge.

Participation in the tax relief available to seniors is strictly voluntary, and many may be surprised that seniors might opt not to take advantage of the Tax Deferral for whatever reason – beit pride, a lack of knowledge about their property tax exemption options or sheer concern about leaving a debt for heirs to pay.

The first key goal of Gears’ effort is to make seniors aware of the options available to them. Once they have the key information, they can discuss with their financial advisers and family before making a decision.

The ultimate goal

If elected mayor, Gears says he will do more than increase awareness about these existing measures. The ultimate goal, Gears says, is to completely eliminate property taxes for seniors aged 65 and older at the city level.

“The state law allows for the elimination of property taxes for the city only,” Gears says. “But I would prefer that all property taxes (from all taxing authorities) be eliminated.”

Prior to throwing his hat in the ring for the mayor’s seat, Gears says he had already been working to get the issue legally on a ballot before voters. But, he says, opposition from the Mayor’s office and city officials has made the process challenging.

Regarding the ballot issue, city of Irving spokeswoman Meribeth Sloan, says the city’s position is that a 100 percent tax exemption for seniors is not legally permitted.

“Mr. Gears attempted to get the Court of Appeals to order the City to hold an election on his proposition, but the Court of Appeals sided with the city and denied Mr. Gears’ request,” Sloan says.

Gears contends the ruling by the Court of Appeals simply gives the city until November to address the issue instead of forcing it to do so right now.

Calls and emails to the Mayor’s office were not answered.

While he vows to fight to give voters an opportunity to voice their opinion on the issue whether he wins or loses, Gears says it’ll be a lot easier to work on this goal from within.

“The seeds of change are best planted in a new conversation. So, that’s why we’ve started public conversation about how to make life better for senior residents,” Gears says.