Tax breaks for seniors get support

Thousands of Massachusetts homeowners who are at least 65 years old would get a break on their property taxes under a measure moving forward on Beacon Hill.

The legislation is designed to help seniors, many on fixed incomes, who are straining under rapidly growing tax bills, as residential property values continue to explode across the state. Governor Mitt Romney, Senate President Robert E. Travaglini, and House Speaker Salvatore F. DiMasi all have vowed to lessen the tax burden on seniors.

''They're in dire straits; they really are," said Pat Larkin, the director of the Westwood Council on Aging, and cochairwoman of a property tax relief task force formed by the Massachusetts Councils on Aging. Larkin said many of the seniors in Westwood bought their homes decades ago, when property values, and taxes, were far lower. Some are being forced to sell houses they have lived in for decades, she said.

''I sincerely believe that if a senior has raised their family in the same house they've lived in for years, it's their home, and they have a right to stay in that home, no matter what," Larkin said.

At least 11,000 senior citizens and probably many more would benefit from one or more of the tax breaks in the measure approved yesterday by the Joint Committee on Revenue. Legislative leaders have not set a date for action in the full House or Senate, but the leaders of both chambers have expressed general support.

Generally, the plan would relieve the property tax burden on seniors by expanding the eligibility criteria for existing tax breaks.

Currently, people older than 65 can claim a credit on their state income taxes if their real estate taxes and water and sewer charges exceed 10 percent of their income. The tax credit is equal to the difference between the two amounts. Under the proposal, the new standard would be 8 percent of income.

For example, under the current rule a senior taxpayer with an annual income of $60,000, an annual tax bill of $6,875, this year's average in Westwood, and water and sewer charges totaling $600 would get a credit of $1,475. Under the new rule, the credit would be $2,675.

Seniors who own houses worth as much as $750,000 would be eligible for the tax break. Currently, only those whose houses are worth $441,000 or less qualify. The income limits for the program, $44,000 for singles and $66,000 for couples filed jointly, would not change.

The Department of Revenue estimates that lowering the percentage from 10 percent of income to 8 percent would allow an additional 10,900 homeowners to claim the credit, at a cost to the state of about $7.7 million. Raising the maximum home value would allow at least 4,000 additional taxpayers to qualify, at a cost of about $3 million. There would be some overlap between the groups, however.

The legislation also would allow cities and towns to offer a property tax exemption equal to 10 percent of the average assessed value of residential property within a city or town. To be eligible, a homeowner would have to be older than 70, a Massachusetts resident for the preceding 10 years; and make no more than $44,000 annually for singles and $66,000 for couples filing jointly. Local leaders could opt to raise the amount of the exemption to 20 percent of the average assessed value in a town and lower the age limit to 65.

Under the 10 percent exemption, an eligible senior who owns a $500,000 house in Milton, where the average assessed value is $480,409, would have an estimated tax bill of $4,763, instead of $5,270. The residential tax rate in Milton is 10.54 per $1,000 of assessed value.

Another provision of the new plan would alter a state program that allows people who are 65 or older with incomes under $20,000 (communities can raise the limit to $40,000) to defer payment of property taxes until the house is sold. The current interest rate on taxes owed is 8 percent a year; the bill would allow cities and towns to charge whatever rate they want, up to 8 percent.

Massachusetts homeowners of all ages are feeling the pinch of rising property taxes: The median property tax bill for single-family houses in the state will be $3,166 in 2005, 9 percent more than last year and up 38 percent from the 2000. Some critics of tax breaks for seniors say that young families who are struggling with the cost of raising children deserve help, too.

But leading figures on Beacon Hill, perhaps cognizant that seniors tend to vote in high numbers, are focusing their attention on older residents.

Yesterday, Kimberly Haberlin, a spokeswoman for DiMasi, said senior tax relief ''remains a priority" for the speaker, but she could not say when it might reach the House floor. Travaglini spokeswoman Ann C. Dufresne, said Travaglini is ''happy to see it advancing," and Romney spokeswoman Julie Teer said the governor ''agrees on the need for senior tax relief." Romney filed his own tax break bill for seniors in March.

In a report released late last year, the Department of Revenue argued that it is time to increase the value of the existing property tax exemptions for older residents and make them available to more people. The agency said income and asset restrictions haven't kept up with inflation and rising property values, leading to a decline in the number of exemptions granted, from 33,203 in 1992 to only 20,359 in 2003.

Rapidly rising real estate values are at the heart of the property-tax problem: In fiscal 2004, according to the department report, residential property values around the state went up 17.2 percent, compared to a 4.7 percent increase in the value of commercial and industrial properties. In Boston, the average property tax bill increased by more than 14 percent, and this year city residents will see a 12 percent hike.

But Romney and others have argued that part of the problem is the way cities and towns assess residential and commercial properties.

Local officials assess houses based on their market value, but they assess commercial buildings based on income from rents and other sources. The governor says that system tends to undervalue commercial buildings, shifting a greater share of the overall tax burden to homeowners.

Scott Greenberger can be reached at greenberger@globe.com.