State Property Tax Relief: New Developments

Circuit Breaker Expands Coverage

MARCH 2006 - With rising - and as some say, inflated - real estate values, members have found it more difficult to qualify for the state's property tax relief program, known as the "circuit breaker." Because of a recent change in that law, you may want to take another look and see if you are now entitled to relief.

Among the conditions for eligibility, the circuit breaker had required that a retiree's home be assessed at no greater than $400,000 - not an unusually high value in today's market. Recently, the maximum value, at which the home can be assessed, has been upped to $600,000 for those wishing to apply this year.

Remember, you must be at least 65 years of age before this January 1, to be eligible. In addition, your income, including pension and Social Security benefits, must be $45,000 or less - $67,000 for a couple. Editor's Note: Since the circuit breaker was first made available for real estate taxes or rents paid in 2001, the maximum income amounts have also gone up, from the original thresholds of $41,000 (single) and $51,000 (couple), further expanding the law's coverage today.

Qualified members can obtain a tax credit or refund on their 2005 real estate taxes, that exceed 10% of their income. Those, who lease, are also eligible, by using 25% of their rent as real estate taxes that they would have paid.

For example, if you had income, including pension and Social Security of $20,000 and paid $2,500 in real estate taxes (or $10,000 in rent) you would receive a $500 credit or refund. You arrive at that, by subtracting 10% of your income ($2,000) from your real estate taxes or one quarter of your rent ($2,500).

The maximum credit or refund is $840. In order to apply for relief, those, who file a state income tax return, must complete and attach the separate circuit breaker form, known as Schedule CB, to their tax return (Form 1). Members, who normally do not file a return, must also complete a Schedule CB with Form 1. You can still apply for a local tax abatement, even if you file for the circuit breaker.