Tennessee has Another Senior Citizen Tax Freeze
Did You Know? Tennessee Has Another Senior Citizen Tax Freeze Law!
Yes!! We do have another tax freeze procedure available to our senior citizens.
Several years ago the Tennessee Constitution was changed to enable the Legislature to enact legislation which would allow local governments to adopt a tax freeze for senior citizens over the age of 65.
Senator Mark Norris, Republican, Shelby County, did a marvelous job is getting this major legislation passed. He deserves tremendous credit for this work and this organization will see that the gets a lot of it.
The catch is that the Legislature put on an income limitation to Senator Norris’ enactment is very prohibitive. So, not enough deserving senior citizens are going to receive benefit from this freeze.
For example, in Shelby County the annual income limitation is $33,340 per annum, and that includes income from just about all sources. In Davidson County the annual income limitation is $36,200 and in Knox County the limit is $34,070.
That’s sad, because it knocks out so many deserving seniors who have struggled to support our local governments through property taxes all their lives.
What may be even sadder is that as of March of this year, only twenty (20) counties and twenty (20) cites have even approved this tax freeze.
Golly Gee! It’s only a tax freeze. It’s not going to break the governments and there won’t even be any immediate effect. The taxes are frozen at the level that existed at the time the taxpayer was approved for the freeze. The taxpayer receives no immediate tax reduction.
Taxes stay at the same level as assessments and tax rates increase. Considering that values of homes have fallen in recent times, the tax freeze is of dubious value or benefit. Many taxpayers will receive reductions in taxes because of the decreases in property values.
Contrasted to other states, which provide its citizens with Homestead Exemptions, the tax freeze in Tennessee is not enough. It is especially not a enough with the low income limit in place.
In Homestead states, taxpayers get immediate reductions in taxes and value or credits which equates to real immediate tax dollar savings.
Tennessee does not offer its citizens a Homestead Exemption. Mississippi offers a homestead exemption to all citizens regardless of age and regardless of income.
In Mississippi, each citizen who applies receives a tax credit of up to $300 in actual taxes off their tax bill. If the homeowner is over 65, the senior gets an additional exemption up to $75,000 in appraised value.
A Homestead exemption is much better, but the Tennessee Constitution will not allow it.
However, Tennessee does have another tax freeze to offer its citizens as an alternative to the one being used by the few counties that implement it.
At the time the alternative tax freeze was enacted, our Constitution did not even allow a regular tax freeze. The freeze had to be designed along the lines of the freezes offered businesses to locate in a certain city or county.
Under this method, title of the property is actually transferred to the local government, usually for $1.00, and is leased back by the taxpayer at rent equal to the amount of taxes at the time of the freeze. The taxpayer pays the lease amount each year instead of taxes because the property is exempt (owned by city or county).
In that way the taxes are really frozen. The taxpayer has the right to repurchase the property for usually $1.00 at any time or at the end of the lease.
Sure it’s a gimmick, but it works for the large commercial properties, why wouldn’t it work for the homeowners?
It sure would work!
A homeowner transfers title to the government for a $1.00 and taxes are frozen until the homeowner dies, sells the property, or just wants to stop the freeze. In any of those events, title is returned to the homeowner.
At any time the homeowner may repurchase the property for $1.00 and the tax freeze is over.
Simple? Yes it is!
However, because of the anticipated costs, the cities and counties have ignored this little known law. They have tried to discourage it by making the procedures appear so ominous as to scare away the taxpayer homeowners.
The procedure is not ominous because it is done all the time. It is a standard way of freezing taxes on commercial and industrial properties and has has worked very well for a long time for those properties.
I would do it on my house in a heartbeat. No fear. It works and works well, safely. If you don’t pay the rent, guess what? You lose the property.
Well! Guess what? If you don’t pay your property taxes you also lose your property. No difference whatsoever.
To qualify, the taxpayer must be at least 70 years old and have paid taxes on a residence in Tennessee for at least 20 years. This is open to all taxpayers of all income ranges.
Hence the lack of interest by the cities and counties. We really need to take some action that will give some real benefit to the seniors. Either raise the income limitations to realistic levels on Senator Norris’ bill, or use this alternative tax freeze method.
Email this post