There are 2 types of tax deferrals; clause 41A and clause 18A. These programs allow owners to defer all or part of their annual property taxes.
The deferred tax accumulates, with simple interest at 8%, as a lien on the property until it is sold.
No sale or transfer can be consummated during the lifetime of the taxpayer, unless the deferred taxes and interest due are paid in full. If the owner has deceased and the deferral is continued by the surviving spouse, repayment is not required during the lifetime of the surviving spouse. If the deferral is not continued by the surviving spouse, or if the property is sold, the deferred taxes plus interest at 16% shall be paid by the estate.
Applicants must be 65 or over on July 1, have been domiciled in Massachusetts for the preceding 10 years, and have had a maximum income of $40,000 in the prior year. The applicant also must have owned and occupied the property or other real property in the Commonwealth for 5 years. The total amount of taxes due, plus interest, for the current year and prior years cannot exceed 50% of the full and fair cash value of the property. A lien filed pursuant to this section shall be subsequent to any liens incurred by securing a reverse mortgage.
Contact the Assessor’s Department if you are interested.
The first year of filing the applicant must complete and sign a tax deferral agreement in addition to their application. This agreement must be signed by the applicant and any co-owners and if the property has a mortgage, by the bank or other entity holding the mortgage. The interest rate provided for this deferral is 8% (MGL CH59 Sec 5 clause 41A).
Real property, to an amount determined as hereinafter provided, of a person who by reason of poverty, or financial hardship resulting from a change to active military status, not including initial enlistment is in the judgment of the assessors unable to contribute fully toward the public charges and which property is owned and occupied by him as his domicile or owns the same jointly with a spouse or jointly or as a tenant in common with a person not a spouse and is occupied by him as his domicile provided, that such person has been domiciled in the commonwealth for the preceding 10 years.
Any such person may, on or before December 15 of each year to which the tax relates or within 3 months after the date on which the bill or notice is first sent, whichever is later, apply to the board of assessors for an exemption of such real property from taxation during such year; provided, however, that in the case of real estate owned by a person jointly or as a tenant in common with a person not his spouse, the exemption shall not exceed that proportion of total valuation which the amount of his interest in such property bears to the whole tax due. The board of assessors may grant such exemption provided that the owner or owners of such real property have entered into a tax deferral and recovery agreement with the board of assessors on behalf of the city or town. The agreement shall provide:
- That no sale or transfer of such real property may be consummated unless the taxes which would otherwise have been assessed on such portion of the real property as is so exempt have been paid, with interest at the rate of 8 per cent per annum or such lesser rate as may be determined by the legislative body of the city or town, subject to its charter, not later than the beginning of the fiscal year to which the tax relates;
- That the total amount of such taxes due, plus interest, thereon, does not exceed 50 per cent of the owner’s proportional share of the full and fair cash value of such real property;
- That upon the demise of the owner of such real property, the heirs-at-law, assignees or devisees shall have first priority to said real property by paying in full the total taxes which would otherwise have been due, plus interest; provided, however, that if such heir-at-law, assignee or devisee in a surviving spouse who enters into a tax deferral and recovery agreement under this clause, payment of the taxes and interest due shall not be required during the life of such surviving spouse. Any additional taxes deferred, plus interest, on said real property under a tax deferral and recovery agreement signed by a surviving spouse shall be added to the taxes and interest which would otherwise have been due, and the payment of which has been postponed during the life of such surviving spouse, in determining the 50 per cent requirement of clause (2);
- That if the taxes due, plus interest, are not paid by the heir-at-law, assignee or devisee or if payment is not postponed during the life of a surviving spouse, such taxes and interest shall be recovered from the estate of the owner; and
- That any joint owner or mortgagee holding a mortgage on such property has given written prior approval for such agreement, which written approval shall be made a part of such agreement; and
- That the tax deferral and recovery agreement shall not exceed 3 tax years, that the total amount of the taxes due, plus interest, shall be paid in 5 equal payments over a 5-year period, and that the first payment shall be due 2 years after the last day of the tax deferral.
In the case of each tax deferral and recovery agreement entered into between the board of assessors and the owner or owners of such real property, the board of assessors shall forthwith cause to be recorded in the registry of deeds of the county or district in which the city or town is situated a statement of their action which shall constitute a lien upon the land covered by such agreement for such taxes as have been assessed under this chapter, plus interest as provided hereinafter.
A lien filed pursuant to this section shall be subsequent to any liens securing a reverse mortgage, excepting shared appreciation instruments. The statement shall name the owner or owners and shall include a description of the land adequate for identification. Unless such a statement is recorded the lien shall not be effective with respect to a bona fide purchaser or other transferee without actual knowledge of such lien. The filing fee for such statement shall be paid by the city or town and shall be added to and become a part of the taxes due.
In addition to the remedies provided by this clause, the recorded statement of the assessors provided for in this clause shall have the same force and effect as a valid taking for nonpayment of taxes under the provisions of section 53 of chapter 60, except that:
- Interest shall accrue at the rate provided in this clause until the conveyance of the property or the death of the person whose taxes have been deferred, after which time interest shall accrue at the rate provided in section 62 of said chapter 60.
- No assignment of the municipality’s interest under this clause may be made pursuant to section 52 of said chapter 60.
- No petition under section 65 of said chapter 60 to foreclose the lien may be filed before the expiration of 6 months from the conveyance of the property or the death of the person whose taxes have been deferred.