Liberty Thought of the Week. – Property Taxes
by Paul Hamby
Rolling back property taxes is a popular idea this year. More than 100 bills have been filed in Jefferson City with proposals to freeze assessments, lower personal property taxes or lower real estate property taxes. Most property taxes go to fund your local public school. A variety of other agencies get the balance of the funds.
Real Estate prices have gone up a lot in the past few years. But that only gains the homeowner a profit if they sell, so when your neighbor’s house sells for a higher price, you will pay more in property tax.
One retired gentleman said “When my house was first purchased 16 years ago my property taxes were around $4000. Now they are closing in on $7000 per year! HELP!!!” He is facing $580 per month in property tax on his home while living on a fixed income.
One proposal is to freeze the real estate property assessment once a senior starts collecting social security. SJR 39 filed by Senator Ben Brown and HJR 45 filed by Representative Ben Keathley put that idea on the Missouri ballot for voters to decide. The bill creates an amendment that would “authorize an exemption from increases in the assessed valuation of residential real property used as a primary residence by a qualified taxpayer.”
In this case, a qualified taxpayer is a senior citizen homeowner collecting social security. Freezing property assessments for seniors makes financial sense. Typically, a home is a senior’s largest investment, and it was bought decades earlier. Every two years the home is reappraised. As the home’s value increases (unrealized capital gains), the senior’s property taxes are increased. If a senior had bought stock when they bought their home, they wouldn’t have paid a single penny on its capital gains.
What Does a Freeze on a Property Assessment Mean?
Every home has a value assessed to the home by the county tax assessor. The assessed value of a full-retirement-age senior’s home will remain the same value it is in the year the homeowner becomes full-retirement age. This “frozen” value will remain in effect until the full-retirement-age senior sells, leaves, or dies, in which case the frozen value will remain in effect until the surviving spouse sells, leaves, or dies while living in the primary residence.
Freezing property assessments will help some seniors on fixed incomes be able to stay in their homes longer. That is good for our communities and families.
Some argue this would be unfair to younger taxpayers or recent home purchasers, but the seniors paid their fair share often for many years. Personally I would like to see this apply to all homeowners, but I think this idea is a good step to help those who need tax relief the most.
Will this hurt schools or other local governments that collect real estate property tax? Government at most levels in Missouri has grown faster than the rest of the economy for the past 2 decades. Are we better off with more government? No. Are we better off keeping senior citizens in their homes and off welfare rolls? Yes.
The proposed bills make this a constitutional amendment. It would be more appropriate to change the statute. If passed by the Missouri Legislature, this proposal may be a ballot question for you to vote on next August or November. Learn more about this issue at motaxreliefnow.org
Property taxes make it seem like you are only renting your property from the government and by the way, your county property tax assessment forms are due by March 1. If you file late, you pay a penalty. If you don’t pay, the government will seize your assets!