The rising numbers of low-income seniors in Travis County is translating into skyrocketing numbers of property tax deferrals, a previously obscure tool approved by the Legislature in 1979 to help struggling seniors stay in their homes. Seniors who qualify for a property tax freeze (available to all homeowners older than 65) can also apply for a deferral of all their property taxes, meaning they live property tax-free until they move or die. Under the arrangement, the deferred taxes, along with an 8 percent annual interest rate, then come due. Heirs can either pay the back taxes, sell the home to raise the tax money or let the county foreclose on the property. In Travis County, the deferrals have jumped from 286 in 2001 to 2,867 as of March.

"It's a symptom of how much pain is out there in general with the economy at this time," said Charles Gilliland, a property tax expert at Texas A&M's Real Estate Center. "You don't take that option if you can avoid it."

Travis County tax officials said they were unable to determine whether any homes that once had deferred property taxes have been foreclosed upon in the county after the death or move of the homeowner.

The number of property tax deferrals have similarly spiked in Hays and Williamson counties. Deborah Hunt, the Williamson County tax assessor-collector, attributed the rise to financial companies that have targeted the elderly in recent years, convincing them to apply for the deferral and then funnel the property tax money into investments, which they promised would provide returns greater than 8 percent. "I felt it was disingenuous to say the least," she said. "It may also be the additional impact of the economy, but I'm not sure it has a huge impact." Hays County officials did not respond to requests for comment.

In Travis County however, Renae Deckard, associate deputy of the Travis County tax assessor-collector office, attributed the increase to the wave of aging baby boomers reaching 65, the age at which seniors become eligible for the deferral. The same legislation also allows seniors to work off their property taxes by providing services to the county, although officials in Travis and Williamson counties could not recall any cases of seniors using that provision.

In Austin, about a quarter of all property tax deferrals are in four East Austin ZIP codes, home to just 12 percent of residents.

The amount of property taxes currently being deferred in Travis County — almost $16 million among about 70 taxing districts — represents a tiny percentage of the overall budgets. And the county eventually recoups most of the deferred money, with interest, except in cases where the amount of back taxes exceeds the value of the home. But if the trends of the past decade continue, or intensify as City of Austin demographer Ryan Robinson predicts, the deferrals could begin impacting budgets. "The more the baby boomers get older, the more that could happen," Deckard said.

Contact Jeremy Schwartz at 912-2942