Buyers Save a Little on Property Tax When Buying a Long-Held Home from Seniors

Real_Estate_Today_bylineAs homeowners 65 and over well know, they get a discount on their home’s property taxes once they have lived in their home for at least 10 years.  It’s called the “senior property tax exemption.”  For those who qualify, 50% of the first $200,000 in actual value of their primary residence is exempted from property taxation.  At 100 mills, that’s worth $720. Rita and I have been in our current house for six years, so we can look forward to saving about that much on our property taxes if we stay put for another 4 years – and if the state legislature continues to fund it, as I’ll explain below.

A veteran who has been deemed permanently disabled by the VA enjoys that same discount, but isn’t subject to that 10-year rule. He/she only has to have owned and lived in the house on Jan. 1st of the tax year. There is also a little-known program by which qualified seniors and veterans can defer the payment of property taxes. Under that program, the state of Colorado pays your local property taxes, creating a lien against your home for the deferred amount, which is paid off like any lien when the house is eventually sold.  Conditions apply, of course, which you can read by Googling “Colorado senior property tax exemption,” as I did.

What you may not know is that any buyer, irrespective of age, enjoys that same property tax exemption for their first calendar year in a home they purchase from a senior citizen who earned that discount.

My new listing (below) brought this topic to mind. The sellers, who are over 65, paid only $1,221 in property tax last year, and the property tax bill will probably be the same for this year’s property taxes, which are payable in April 2019. Whoever buys the home in the next month or so will enjoy that senior property tax exemption next April and won’t begin paying the full property tax amount until 2020. The reason for this mini-windfall is that state law specifies that the exemption only requires that an eligible senior owned and lived in the house on Jan. 1st of the tax year.

Something else you may not know is that this property tax exemption does not cost the county or other local tax jurisdictions a penny. The state reimburses the jurisdictions for the discount given to qualified seniors. After making their annual revenue and expense estimates, the state legislature determines how much of a discount qualified seniors will earn. It wasn’t funded in 2009, 2010 and 2011, but it was restored in 2012 and remains in effect. Because the state’s balance sheet is expected to look good for the coming year, there’s certainly reason for optimism.

My only complaint with the senior property tax exemption is that it requires 10 years’ ownership of a home before seniors quality. This poses a disincentive to downsizing, which often makes sense for seniors, especially after one of them has died.

 

Author: Golden Real Estate, Inc.

Golden Real Estate is a prominent member of the Denver/Jefferson County real estate scene. Based in Golden, we service both Denver and Jeffco, representing both buyers and sellers. We're well known for Broker Jim Smith's weekly "Real Estate Today" column published in the Denver and Jeffco editions of the Denver Post's YourHub section each Thursday. The column also appears in several weekly newspapers and is archived at www.JimSmithColumns.com. We have nine agents, all of whom are Realtors and EcoBrokers. Our office is solar powered and several of us drive electrics cars. Known for our sustainable practices, we accept polystyrene (aka "Styrofoam") for recycling, keeping 200 cubic yards per year out of area landfills.

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