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Senior and Disabled Deferral
Special Assessment
What are property tax deferral programs?
The Oregon Legislature established programs that allow qualifying citizens to delay paying property taxes on their residences—including manufactured homes, houseboats, multi-family, and income-producing properties (e.g., home business). If you qualify for one of the deferral programs, the state will pay your property taxes to the county. A lien will be placed on your property. You will be charged lien fees, which are deferred. Interest on the deferred taxes, at 6 percent per year, also is deferred.
How do I qualify for property tax deferral?
- Disabled Citizens’ Property Tax Deferral.
- You must be determined eligible to receive or be receiving federal Social Security disability benefits due to disability or blindness on or before April 15 of the year you file the claim. You must send a copy of your federal Social Security award letter or statement of eligibility with your deferral application.
- Only one joint property owner needs to qualify as an individual with disabilities.
- Senior Citizens’ Property Tax Deferral.
- Only one spouse must be age 62 or older on or before April 15 of the year you file the claim.
- All joint applicants filing for deferral must be age 62 on or before April 15 of the year the claim is filed. (If you are married and apply jointly with your spouse, you both must be 62 years old on or before April 15. If only one spouse is 62 you must file your application as an individual.)
How do I apply for a property tax deferral?
First, read the information about the deferral programs to help you decide if you qualify for one of them. Complete the application and submit it to the county assessor’s office between January 1 and April 15.
The county assessor’s office will send the Oregon Department of Revenue your application. The department will notify you in writing if your application is either approved or denied.
Can I get a deferral if I owe delinquent taxes?
Yes. You are responsible to pay any delinquent taxes to the county. You may qualify for a Delay of Foreclosure if you own real property. See below for more information and an application. Remember: You can not apply to the county assessor for a delay until you receive approval for the deferral program.
Personal property, manufactured homes, or floating homes do not qualify for delay of foreclosure.
Do I need to apply for deferral each year?
No. You only need to apply once for the deferral unless your spouse dies. (If you are a surviving spouse, see below.) Once your application is approved the Department of Revenue will pay your 2007-2008 property taxes that are due November 15 and all future taxes as long as you remain eligible.
How is the lien on my property applied?
Any previously recorded mortgage or trust deed liens are first. Then property tax deferral liens.
The lien amount for the Disabled Citizens’ Property Tax Deferral is 90 percent of the real market value of your property at the time your original application was filed. The lien amount for the Senior Citizens’ Property Tax Deferral is an estimate of future taxes to be paid and interest to be charged based on life expectancy tables.
Do I need to tell my mortgage company?
Yes. You should inform your mortgage company that the state of Oregon will be paying your property taxes. You may want to send them a copy of your deferral approval letter.
Is my yearly income important?
Yes. After your initial approval for the program, your household income must stay below the annual federal adjusted gross income (FAGI) limit. This limit may change each year. The FAGI limit for income tax year 2006 is $36,500.
What if my income exceeds the federal adjusted gross income limit after the first year?
If your income exceeds the FAGI limit after the initial year of acceptance, your eligibility may be affected. You may be responsible for all or part of your property taxes for that year. If your FAGI is over the limit, some of your property taxes may be paid. The deferral amount will be reduced by 50 cents for each dollar over the $36,500 income limit. The balance of your account continues to be deferred. If your income falls below the FAGI limit in following years your property taxes will be paid.
Example: If your FAGI is $38,500, your deferral amount will be reduced by 50 cents for each dollar over $35,000. You are $2,000 over the limit. At 50 cents on the dollar, your deferral is reduced by $1,000. If your property taxes are $2,500 the amount deferred is reduced by $1,000. The department will pay $1,500 of your property taxes; you are responsible for paying $1,000 to the county.
If the amount of your income exceeds the FAGI by more than double your property tax bill, no taxes will be deferred for that year.
Example: If your FAGI is $41,500 and the current FAGI limit is $36,500, you are $5,000 over the limit. Unless your property taxes exceed $2,501, you will not qualify for a deferral that year.
How does my deferral account become disqualified?
- When you sell the property or it changes ownership. Example: You deed your property to your children.
- When you move permanently from the property, unless it is for medical reasons. (If it is for medical reasons, see above.)
- When the applicant dies. (If you are a surviving spouse, see below.)
The deferred taxes, plus interest of 6 percent per year, and the lien recording fees must be paid by August 15 of the calendar year following one of the above events.
What if I'm a surviving spouse?
You don’t need to file a surviving spouse application if the following conditions apply. Your deferral account will continue and Revenue will pay your property taxes.
- You and your spouse each qualified for the deferral. You both signed the original application as joint owners, and you were each 62 years old at the time the original application was filed.
- You continue to meet the qualifying requirements of the deferral program. For example: your income is under the household limit.
If the above conditions do not apply and you were 59-1/2 or older at the time of the taxpayer’s death, you must meet the deferral requirements and file a surviving spouse application, even if you signed the original application. Once Revenue approves your application, the department will continue to pay your property taxes.
–or–
If you are younger than 59-1/2 at the time of the taxpayer’s death you may file a surviving spouse application. Because of your age, your deferral account becomes inactive. The account balance remains deferred and interest on the past-deferred taxes continues to accrue. By law, Revenue cannot pay your current and future property taxes. You are responsible for paying all current and future taxes to the county.
You may reapply to activate the deferral when:
- You reach age 62, or
- You become eligible to, or begin to, receive Social Security disability benefits, and
- You continue to meet the other deferral qualifications.
Once Revenue approves your application, your account becomes active again, and the department will pay your future property taxes.
File your surviving spouse application with your county assessor’s office by April 15 of the year following the taxpayer’s death.
As a surviving spouse you may also choose to pay the deferral account in full by August 15 of the following year.
What happens if I divorce?
A divorce may affect your property tax deferral. Please contact the Department of Revenue.
How do I know that the department paid my taxes?
Every year the Department of Revenue will send you a statement of your deferral account.
How is interest computed?
The 6 percent interest is simple, meaning that the interest computes yearly against the deferred tax amounts. Deferral accounts do not accrue compound interest, which means interest is computed on previous interest in addition to the deferred tax amounts.
For example, if your property taxes were $1,000, the interest for one year would be $60 (0.06 × $1,000 = $60). Interest continues to accrue each year on the deferred tax amounts.
The department calculates interest annually after paying the deferred property taxes to the county (usually November 15).
The table below shows an example of five years of deferred property taxes and the simple interest that accrues during that time.
Property Tax Year
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Property
Tax Paid
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Deferred Tax
Running Balance
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Lien Fees
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6% Simple Interest
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2007–2008
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$1,000.00
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$1,000.00
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$40.00
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$0.00
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2008–2009
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$1,000.00
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$2,000.00
($1,000 + $1,000)
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0.00
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$60.00
(.06 × $1,000)
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2009–2010
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$1,000.00
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$3,000.00
($2,000 + $1,000)
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0.00
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$120.00
(.06 × $2,000)
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2010–2011
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$1,000.00
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$4,000.00
($3,000 + $1,000)
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0.00
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$180.00
(.06 × $3,000)
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2011–2012
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$1,000.00
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$5,000.00
($4,000 + $1,000)
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0.00
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$240.00
(.06 × $4,000)
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Five Year Total
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$5,000.00
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$5,000.00
(5 years × $1,000)
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$40.00
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$600.00
($60+$120+$180+$240)
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Total amount owed after five years in the program = $5,640
($5,000 tax + $40 lien fees + $600 interest)
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Can payments be made on the account?
Yes. You may pay all or part of your deferral account and continue to defer current and future taxes. Others (relatives or friends) may also make payments on your account if you do not object.
Make your payments to the Oregon Department of Revenue. Payments are applied first to accrued interest, then to past deferred taxes, and then to lien fees.
When the property is inherited and the heir makes the property his or her principal residence by August 15 of the following year, a repayment schedule may be arranged with Revenue.
Can I deduct property taxes?
If you file a federal income tax return and you itemize deductions on Schedule A, you may deduct the amount of property taxes the department pays to the county for that year. Deferred property taxes are deductible on an individual income tax return only in the year that the taxes are paid, not in the year the deferral account receives full payment.
Interest on the deferred property taxes is deductible as home mortgage interest in the year the interest is paid. Any payment amount applied to accrued interest is deductible in that year. If you pay off your deferral account, the total amount of accrued interest paid is deductible for the year in which the account receives full payment.
Can I get deferral on multifamily or income-producing property?
- If you own and live in one unit of a multi-family building, the county assessor will determine the portion of property taxes that Revenue will pay. You will be responsible for paying the remaining portion to the county.
- If you have a business located on your property, the county assessor will determine the portion of property taxes that Revenue will pay. You will be responsible for paying the remaining portion to the county.
Can I refinance or get a reverse mortgage?
Yes. A lender may require first lien position because of a loan transaction for a refinance, reverse mortgage or another type of loan. The department requires a signed and dated cancel statement from the applicant(s), along with payment in full to release the department's lien.
If we do not receive a signed cancel statement to close the deferral account, the department's lien will remain in place.
If the cancel statement is received prior to April15, the applicant(s) may contact the Deferral Unit to request an application to reapply for the program.
If the cancel statement was received after April 15, the applicant(s) will be responsible to pay the current year's property taxes to the county on November 15. The applicant is responsible to contact the county or Deferral Unit to request a application booklet the following year.
What is the special assessment program?
The Oregon Legislature established the program allowing qualifying citizens to delay paying improvements that are charged against their property. Types of assessment include street paving, sidewalks, and sewer assessments. If you qualify for program, the state will pay your installment payments to the taxing districts for you. A lien will be placed on your property. You will be charged lien fees, which are deferred. Interest on the deferred taxes, at 6 percent per year, also is deferred.
How do I qualify for special assessment deferral?
Qualifications for the deferral programs
- The taxpayer filing the claim for deferral must be 62 years of age or older.
- Husband and wife. Either may apply, or both may apply as joint applicants. You must live on the property.
- Joint Owners. Two or more people may apply for deferral as joint applicants. Together you must own or be buying the property and all joint applicants must live on the property.
- Household income must be less than $35,000 for the income tax year 2005. (This includes taxable and nontaxable income including Social Security and pensions.) This is not a federal adjusted income (FAGI) amount. This income limit may change each year.
- You must have a recorded deed to the property. Or, you must be buying the property under a recorded sales contract. You may have a revocable trust. You are not eligible for a deferral if you have a life estate interest in the property.
- You must live on the property; however you may live away from the property due to medical reasons. You must send a medical statement on letterhead from your health care provider to the Oregon Department of Revenue. Example: Mrs. Jones can no longer live in her home due to medical reasons. (Exact medical condition is not needed.)
How do I apply for special assessment deferral?
First, read the information about the deferral programs to help you decide if you qualify for one of them. Complete the application and submit it to the county assessor’s office between January 1 and April 15.
The county assessor’s office will send the Oregon Department of Revenue your application. The department will notify you in writing if your application is either approved or denied.
Can I get a deferral if I owe delinquent taxes?
Yes. If the amount of the special assessment for the local improvement is delinquent at the time of your initial application for the deferral the state will pay delinquent installments including interest to the assessment district.
How does my deferral account become disqualified?
- When you sell the property or it changes ownership. Example: You deed your property to your children.
- When you move permanently from the property, unless it is for medical reasons. (If it is for medical reasons, see above.)
- When the applicant dies. (If you are a surviving spouse, see above.)
The deferred installment payments, plus interest of 6 percent per year, and the lien recording fees must be paid by August 15 of the calendar year following one of the above events.
How do I know that the department paid the special assessment?
Every year the Department of Revenue will send you a statement of your Special Assessment deferral account.
How is interest computed?
The 6 percent interest is simple, meaning that the interest computes yearly against the deferred tax amounts. Deferral accounts do not accrue compound interest, which means interest is computed on previous interest in addition to the deferred tax amounts.
For example, if your property taxes were $1,000, the interest for one year would be $60 (0.06 × $1,000 = $60). Interest continues to accrue each year on the deferred tax amounts.
The department calculates interest annually after paying the deferred property taxes to the county (usually November 15).
The table below shows an example of five years of deferred property taxes and the simple interest that accrues during that time.
Property Tax Year
|
Property
Tax Paid
|
Deferred Tax
Running Balance
|
Lien Fees
|
6% Simple Interest
|
2007–2008
|
$1,000.00
|
$1,000.00
|
$40.00
|
$0.00
|
2008–2009
|
$1,000.00
|
$2,000.00
($1,000 + $1,000)
|
0.00
|
$60.00
(.06 × $1,000)
|
2009–2010
|
$1,000.00
|
$3,000.00
($2,000 + $1,000)
|
0.00
|
$120.00
(.06 × $2,000)
|
2010–2011
|
$1,000.00
|
$4,000.00
($3,000 + $1,000)
|
0.00
|
$180.00
(.06 × $3,000)
|
2011–2012
|
$1,000.00
|
$5,000.00
($4,000 + $1,000)
|
0.00
|
$240.00
(.06 × $4,000)
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Five Year Total
|
$5,000.00
|
$5,000.00
(5 years × $1,000)
|
$40.00
|
$600.00
($60+$120+$180+$240)
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Total amount owed after five years in the program = $5,640
($5,000 tax + $40 lien fees + $600 interest)
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Can I make payments on the account?
Yes. You may pay all or part of your deferral account and continue to defer current and future assessment amounts. Others (relatives or friends) may also make payments on your account if you do not object.
Make your payments to the Oregon Department of Revenue. Payments are applied first to accrued interest, then to past deferred installment payments, and then to lien fees.
When the property is inherited and the heir makes the property his or her principal residence by August 15 of the following year, a repayment schedule may be arranged with Revenue.
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