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By Simone Gaunt & Laura Feakes
With tight budgets, many elders are looking for ways to reduce their tax burden. Below are some possibilities. For additional information contact your local Board of Assessors, the Massachusetts Department of Revenue (DOR) (Toll-Free in MA 1-800-392-6089).
Property Tax Exemption
A tax exemption is a discharge from the obligation to pay all or a portion of a tax. Pursuant to Clauses 41, 41B and 41C of Sec. 5 of Ch. 59, property tax exemptions are provided to those age 70 or older (or joint owner with a spouse age 70 or older) who satisfy asset, annual income, and residency requirements. The exemption amount is $500. Applications must be filed annually with the local assessors in the city or town where the property is located. Since eligibility requirements may vary by town, contact your local Board of Assessors for more information.
Home Energy Efficiency Credit
Subject to certain limitations, owners of residential properties located in Massachusetts may claim an income tax credit in the amount of their net expenditures for the purchase and installation of energy-efficient heating items in such properties. Qualified purchases include items purchased on or after November 1, 2005 but not later than March 31, 2006, and costs related to the installation of such items.
Items include: home insulation; new window installation; programmable thermostats; fuel efficient furnaces, boilers, oil, gas, propane, or electric heating systems; solar domestic hot water systems; pipe insulation for heating systems; and any energy-efficient item similarly related to heat conservation. For more information, see: DOR Technical Information Release TIR 05-18.
Home Heating Fuel Deduction for Taxpayers
Certain owners and renters of residential property in Massachusetts may claim a home heating fuel deduction on their income taxes up to a maximum of $800 for the cost of home heating oil, natural gas, and propane purchased between November 1, 2005 and March 31, 2006. A taxpayer who qualifies for the deduction may apply the deduction in taxable year 2005 for purchases made between November 1, 2005 and December 31, 2005. If the taxpayer does not take the full $800 deduction in taxable year 2005, the taxpayer may take the remainder in taxable year 2006 for purchases made between January 1, 2006 and March 31, 2006. The deduction is available to single persons whose adjusted gross income is $50,000 or less and joint filers and heads of household filers whose adjusted gross income is $75,000 or less. For more information, see: DOR Technical Information Release TIR 05-18.
Real Estate Tax Credit for those age 65 and older (Circuit Breaker Credit)
An owner or renter of a principal residence located in Massachusetts who is age 65 or older may be eligible to claim a refundable credit against personal income taxes. The credit is based upon the actual real estate taxes or rent paid during the tax year by a taxpayer eligible to claim the credit. No credit is allowed if the taxpayer receives a government rent subsidy or rents from a landlord not required to pay real estate taxes. For tax year 2006, the maximum credit allowed for both renters and homeowners is $870. To be eligible for the credit for 2006, the taxpayer’s “total income” cannot exceed $46,000 for a single filer who is not the head of a household, $58,000 for a head of household, or $70,000 for taxpayers filing jointly; and for homeowners, the assessed valuation as of January 1, 2006, before residential exemptions but after abatements, of the homeowner’s personal residence cannot exceed $684,000. For more information, see: DOR Technical Information Release TIR 06-17.
Simone Gaunt and Laura Feakes are Elder Services Information & Referral Specialists who can be reached at 1-800-544-5242 or 499-0524.