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New old news from Texas for old ERs
Old 10-07-2005, 08:32 PM   #1
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New old news from Texas for old ERs

I just learned from a friend about a Texas law that (sort of) exempts those 65 years of age and older from preoperty taxes. I did a bit of homework. The law was passed many years ago, but is little known among most folks.

From http://www.oag.state.tx.us/alerts/al...p?id=48&type=2 : "Texas Tax Code, Section 33.06, allows taxpayers 65 years of age or older to defer their property taxes until their estates are settled after death."

(Apparently many states allow something similar, although many have income and property value limits, which Texas does not have.)

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Re: New old news from Texas for old ERs
Old 10-07-2005, 09:17 PM   #2
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Re: New old news from Texas for old ERs

Interesting perq. Do you know what is the interest rate on these deferals? Does it float, or change by legislative or administrative fiat?

Ha
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Re: New old news from Texas for old ERs
Old 10-07-2005, 10:23 PM   #3
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Re: New old news from Texas for old ERs

Quote:
Originally Posted by HaHa
Interesting perq. Do you know what is the interest rate on these deferals? Does it float, or change by legislative or administrative fiat?
"A tax lien remains on the property and interest continues to accrue during the period collection of taxes is deferred or abated under this section. The annual interest rate during the deferral or abatement period is eight percent..."

http://www.window.state.tx.us/taxinf...33a2.htm#33.06
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Re: New old news from Texas for old ERs
Old 10-07-2005, 10:40 PM   #4
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Re: New old news from Texas for old ERs

Quote:
Originally Posted by HaHa
Interesting perq. Do you know what is the interest rate on these deferals? Does it float, or change by legislative or administrative fiat?
Ha, you know that WA has something similar, right?

WA senior property tax deferrals
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Re: New old news from Texas for old ERs
Old 10-07-2005, 10:47 PM   #5
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Re: New old news from Texas for old ERs

Wab, I didn't see any discussion of interest on the deferred property taxes... did I miss that?
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Re: New old news from Texas for old ERs
Old 10-07-2005, 10:54 PM   #6
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Re: New old news from Texas for old ERs

I don't think details were in that blurb, but if you opt to have the state pay your property taxes, then "under this program the state paid amounts become a lien against the property in favor of the state and 8% annual interest is charged until paid."
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Re: New old news from Texas for old ERs
Old 10-08-2005, 07:00 AM   #7
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Re: New old news from Texas for old ERs

Quote:
Originally Posted by HaHa
Interesting perq. Do you know what is the interest rate on these deferals? Does it float, or change by legislative or administrative fiat?

Ha
Well, at least your spouse won't care about the interest rate. The law cited by REW also shows that funds aren't collectible until 181 days after the surviving spouse dies. So perhaps only the kids care.

The guy who told me about this was helping a woman combine this with a reverse mortgage, so she'll not only stop paying the taxes, but will deplete the equity as well.
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Re: New old news from Texas for old ERs
Old 10-08-2005, 07:27 AM   #8
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Re: New old news from Texas for old ERs

I wonder if it isn't a default on the reverse mortgage to defer the property taxes. The question might be whether the lien for defered taxes takes priority over the lien for the mortgage. If it does take priority, I'll bet the lender requires payment of taxes.
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Re: New old news from Texas for old ERs
Old 10-08-2005, 08:01 AM   #9
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Re: New old news from Texas for old ERs

Quote:
Originally Posted by Martha
I wonder if it isn't a default on the reverse mortgage to defer the property taxes.* The question might be whether the lien for defered taxes takes priority over the lien for the mortgage.* If it does take priority, I'll bet the lender requires payment of taxes.
Aha -- that explains why the part I left out shouldn't have been omitted. In this case, a portion of the deferred amount was being applied to a life insurance policy. I had assumed that was unrelated, just for the benefit of the heirs, but it makes sense that the lender would want those taxes covered, so it was likely a condition of the mortgage.
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Re: New old news from Texas for old ERs
Old 10-08-2005, 06:50 PM   #10
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Re: New old news from Texas for old ERs

Quote:
Originally Posted by wab
Ha, you know that WA has something similar, right?

WA senior property tax deferrals
Thanks for that link, Wab. My income is too high to qualify. It appears that an 8% intrest rate is used.

Ha
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Re: New old news from Texas for old ERs
Old 10-09-2005, 10:49 AM   #11
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Re: New old news from Texas for old ERs

Quote:
Originally Posted by Martha
I wonder if it isn't a default on the reverse mortgage to defer the property taxes.* The question might be whether the lien for defered taxes takes priority over the lien for the mortgage.* If it does take priority, I'll bet the lender requires payment of taxes.
The Government ALWAYS gets paid first. I would assume that any reverse mortgage lender would require some form of additional collateral (life insurance?) or, more likely, prohibit property tax deferrals as a condition for the mortgage.

Does anyone know of any other states that allow this? It's a huge benefit for older retirees.
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Re: New old news from Texas for old ERs
Old 10-09-2005, 10:58 AM   #12
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Re: New old news from Texas for old ERs

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Originally Posted by . . . Yrs to Go
The Government ALWAYS gets paid first.
Well, almost always. Generally, unpaid real estate taxes take priority over a mortgage. However, deferred taxes may be treated differently, like a loan. In that case, the taxes may be junior to prior mortgages. I believe this may be the case in Minnesota.

Quote:
I would assume that any reverse mortgage lender would require some form of additional collateral (life insurance?) or, more likely, prohibit property tax deferrals as a condition for the mortgage.

Does anyone know of any other states that allow this? It's a huge benefit for older retirees.
I think a lot of states have this program, including Minnesota: http://tinyurl.com/dmlmg
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