By Jeffrey Epstein
The state program — referred to in shorthand as Clause 41A after the relevant part of the statute — has been around for years, but some homeowners only discovered it recently through an article published in the Boston Globe. Bedford Town Hall has gotten inquiries about the program. State Representative Ken Gordon says he heard about it from the Bedford Council on Aging’s Rick Rosen, and now gets asked about it often in meetings with senior citizens. All this attention, in turn, led town Board of Assessors Clerk Ronald Cordes to dig into the program and report to the Selectmen on June 11. Rep. Gordon sat next to Cordes to help explain the program.
What the tax program is all about
Essentially, the Clause 41A program lets homeowners over age 65 — and who meet many other criteria — defer all or part of the property tax on their primary residence. It is not an exemption or discharge of the tax; it just defers payment until the taxpayer sells the property or passes away. The intention is to allow the taxpayer to use critical funds for living expenses instead of the tax, allowing the property to be affordable when it might not otherwise be. On the municipal side, Cordes stressed, the town does not lose any revenue, it just gets it in a later year.
While Clause 41A is a state program, it is administered by municipalities, and towns are allowed to make certain customizations if they wish. For example, one of the default rules is that an eligible household’s income for the previous calendar year can’t be more than $20,000. But a town can increase that income limit up to the amount of the state income tax “circuit breaker,” Cordes said. (For a detailed explanation of the “circuit breaker tax credit,” click here: https://www.mass.gov/service-details/senior-circuit-breaker-tax-credit.) Also, a town can lower the default 8 percent simple interest rate that accrues on the deferred tax. These kinds of details, Cordes stated, make the true picture far more complex than the impression people may have received from the Globe article.
What are other towns doing?
Cordes told the Selectmen that he took a look at the 53 towns that changed either the income limit or the interest rate or both. His written testimony offers charts and figures that attempt to glean useful information about this data, although the towns have different sizes, finances, and experiences. He did find that Sudbury–with the third highest participation rate of the 53–raised its income limit to the legal maximum while reducing its interest rate to 2.5 percent, making it an “exemplar of this program,” he said. Sudbury has also promoted its program.
What can Bedford do?
Any local changes must happen at one or more Town Meetings. Based on the data from the other towns, the Assessors are offering four different scenarios:
Scenario 1: $40,000 income limit, 4 percent interest rate.
Scenario 2: $75,000 income limit, 3 percent interest rate.
Scenario 3: Income limit at circuit breaker level, 2.5 percent interest rate.
Scenario 4: Income limit at circuit breaker level, interest rate below 2.5 percent.
Although the Selectmen were clearly intrigued by these possibilities, they did not find any immediate consensus on what to do. The Council on Aging, however, was expected to discuss the issue and the four scenarios at its meeting June 13.
Bill in State Legislature
Rep. Gordon, for his part, has put up a bill (HD.4800) to make changes to the program. “I want to make it more affordable to more people,” he said. However, the bill’s language is not yet complete and Rep. Gordon does not even expect it to come to a vote this late in the legislative term. He says if he is re-elected he will offer it again in the next legislative session and expects it to be marked up in the Revenue Committee.