Older residents of Dallas, Texas, may be looking for ways to make ends meet or stretch each dollar, and saving on taxes is one thing many residents might take advantage of. One politician in a nearby town sent mailers to 8,500 senior citizens stating that Texas law lets them avoid paying property taxes. The statement is not incorrect — Texas tax law does let individuals aged 65 or older defer property taxes until the point of death.
According to reports, there are mixed feelings about deferring property taxes for so long. One resident pointed out that deferrals could inhibit asset protection. The taxes don’t go away. Instead, they come due all at once when the owner of the home dies, making heirs responsible for total tax payment.
In the city where the political candidate is informing seniors about their right to defer property taxes, public officials are worried. According to reports, seniors’ property tax payments make up two percent of the city’s general fund. Only 199 seniors in the city reportedly took advantage of the deferral last year; if all eligible individuals did so this year, the city could lose close to $14 million in tax revenue.
According to reports, the deferral law was drafted in the 1970s. The law was meant to assist seniors struggling with finances so they didn’t lose their homes. According to reports, the deferral forms don’t require seniors to prove minimal incomes. The deferral law lets anyone who is disabled or over the age of 65 defer property taxes for the rest of their life; the only requirement is that any involved mortgage lender consents to the deferral.
Deferring property taxes for years could result in a large tax bill upon the property owner’s death. Heirs who are suddenly hit with expensive tax bills could lose properties they inherited, impacting family legacies. It’s important to consider all ramifications when taking advantage of any tax loophole, especially those related to future payments or estates.
Source: The Dallas Morning News, “Irving mayor candidate suggests seniors stop paying property taxes” Avi Selk, Apr. 13, 2014