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At the April1, 2019 meeting of the
Middletown Town Council, there was considerable discussion about proposals
regarding property tax exemptions. The Town currently provides a variety of
exemptions:
Veterans Real Estate, Motor Vehicle
Exemptions
Seniors
65-74 Flat Exemption
Income
Based Exemption
Seniors
75+ Flat Exemption
Income
Based Exemption
One proposal focused on increasing
the exemptions on residential property, based on age as well as on income.
The second, a Homestead Exemption,
was intended to provide tax relief to those whose primary residence is in
Middletown.
The new proposal to increase the Senior Exemptions recommends changing
the age brackets to 65-69 and 70+. It also adjusts the
income-based requirements.
The
Homestead Exemption is intended to provide tax relief to residents whose primary
residence in in Middletown.
The fact
that Middletown is an attractive destination for tourists has resulted in an
increase of short-term rentals, which many regard as profit-making entities,
while the year-round residents are responsible for maintaining the
superstructure that supports that commercialism.
The proposal
for a Homestead Exemption is intended to level the playing field by shifting
more of the financial responsibility to those who benefit.
The
principal residence would be “legally titled to the resident taxpayer, a trust
to which the resident taxpayer is the named beneficiary, or to a corporate
entity owned and controlled by the resident taxpayer.”
The property
would have to be “used exclusively for residential purposes and improved with a
dwelling containing less than five units, or used for a combination of
residential and commercial uses.”
The resident
taxpayer must hold legal title to the property as evidenced by the address on
the owner’s driver’s license, car registration, federal income tax return,
state income tax return, the Middletown voter’s address and/or other documents.
In the case
of multiple units within the property, the property tax would be pro-rated to
reflect the owner-occupied area
One of the
most important issues to be resolved is the impact of exemptions on Town
revenue. In the development of the Town Budget, the proposed expenditures are
identified – those items that require funding, such as salaries and
superstructure, as well as new efforts to promote economic growth and
development. Taxes provide that support.
Before
exemptions can be increased, it is important to identify the consequences of
the resulting loss of revenue and identify the sources of replacement. How
would the costs shift? What would be the impact?
As a new entity, a Homestead Exemption must be approved by the
legislature. While the details – the
exact amounts, age requirements, etc. – need not be identified at this time, a
basic proposal must be presented and approved within the next few weeks if a
Homestead Exemption is to be implemented for the next tax assessment.
A delayed decision means that no action can be taken this year, and
residents will have to wait another year for potential relief.
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