Elderly Resist Linking Death and Taxes

The idea of not paying property taxes until death may appeal to many, but few of the elderly who could take advantage of such programs across the nation do.

In Illinois, only 527 of the estimated 270,000 people eligible enrolled in the decade-old Senior Citizens Real Estate Tax Deferral Program this year.

In California, only about 12,000 of the 900,000 elderly and disabled eligible for its program signed up.

Even in Oregon, where lawmakers approved the program nearly 30 years ago and its participation rate has long been admired, only 11,681 of an estimated 88,000 eligible households deferred their taxes this year.

Some find it hard to understand why the programs are largely ignored.

“This is the one program that addresses the lament heard most often by senior citizens . . . ‘Increased property taxes are going to drive me out of my home,’ ” said Jim Nowlan, president of the Taxpayers Federation of Illinois.

The Illinois program is typical of many in the 19 states that allow qualified elderly to use equity in their homes to guarantee payment on deferred taxes, according to a National Conference of State Legislatures survey.

Deferred taxes become a lien on the home that is satisfied with interest (6% in Illinois) when the home is sold or when the homeowners’ estate is settled.

Six of the 19 states do not impose income-eligibility guidelines for program participation, according to the survey. A number of them only have the program through local option.

“It would be impossible for me to keep my house if I didn’t have this,” said a 66-year-old widow in suburban Chicago who is deferring her $5,000-a-year property tax bill with the state’s help.

“My house is paid for, but I don’t have any backup money,” she said. “I raised four kids after their father died 19 years ago.”

She spoke on the condition of anonymity, saying she didn’t want her personal finances made public.

This year, nearly $1 million in Illinois property taxes was deferred, with the average homeowner avoiding payment of about $1,857 in taxes.

Since the Illinois Legislature raised the annual household income cap for participants from $14,000 to $25,000 this fall, an additional 165,000 people are eligible.

County treasurers who accept applications for the program say participation has been low mainly because elderly people do not want a lien on their property.

“One has to realize that it’s not a giveaway program,” said Don Redfoot, legislative director for the American Assn. of Retired Persons. “It’s one where you are taking on debt.”

Douglas Aurand, president of the Illinois County Treasurers Assn., said he has standard advice for anyone who is concerned that participation will nibble away at his or her estate.

“I tell them, ‘Where does it say you have to leave something for your kids?’ ” he said.

Ken Scholen, director of the National Center for Home Equity Conversion in Apple Valley, Minn., who recently did a study of the tax-deferral programs, said many elderly people either don’t know about the programs or don’t understand them.

“It has to do with taxes, debt and the government, and that might make some people nervous,” he added. “And it might be hard to believe that you can put off taxes until your death.”

Shirley Leiper, senior deferral program manager for the Oregon Department of Revenue, said there is a simple explanation why her state’s participation level--at 13%--is significantly higher than elsewhere.

‘Ours is well publicized, and it’s got a 30-year track record,” she said.

States that allow eligible senior citizens to put off paying property taxes until death are: California, Colorado, Florida, Georgia, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, New Hampshire, North Dakota, Oregon, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin.