Should other factors be considered in determining the Senior Property Tax Exemption?
The State provides a $150,000 property tax exemption to seniors 65 years old. The Kenai Borough allows up to $300,000. The senior exemption up to $150,000 is required under Alaska statute 29.45.030. The additional amount of the exemption, up to $300,000, is an optional exemption authorized under Alaska statute 29.45.050 and adopted in Borough code 5.12.105. However, there are factors that will reduce the exemption. Borough code 5.12.105. states:
Real property tax—Exemptions—Senior citizens, disabled veterans and surviving spouses thereof.
1. If property is occupied by a person other than the eligible applicant and his or her spouse and minor children, this exemption applies only to the portion of the property occupied by the eligible applicant and his or her spouse and minor children as a permanent place of abode.
When a portion of a property is occupied by an ineligible person, that portion is taxable as a percentage of the total value. For example, if an ineligible person occupies 1 bedroom and the house contains a total of 4 bedrooms, the taxable portion is calculated to be 25 percent. If an ineligible person occupies a separate apartment within a house, the square footage of the apartment as a percentage of the whole is taxable. The senior exemption cannot exceed $300,000 in any instance. Blended, multi-generational, and elderly home care families are becoming common as a way to survive these economic times of hardship, but if a senior opens his home to “ineligible” persons, that senior will be penalized.
Consider the senior whose grown children fall on hard times and “come home.” If half of the house is occupied by the financially strapped family, “who comes home,” the senior would lose half of his/her exemption. Consider also the senior homeowner who keeps an elderly parent at home during that elderly person’s last years. The amount of space that elderly parent takes up will be used to reduce the senior homeowner’s exemption. Consider too, the property-owning senior couple who live on a fixed income, receive state assistance, and barely get by themselves. If their grown children must come home to live with the parents, the senior parents will be severely penalized because of the amount of living space the children and grandchildren occupy. Faced with paying property tax that were once exempted becomes a financial burden to both the property-owning senior and the financially strapped family in need.
My point is that other factors ought to play into how the senior property tax exemption is calculated. The law, as stated above, recognizes only the spouse and minor children as eligible occupants of the home and no one else. But what about the senior couple who have a couple rooms to spare and take in foster children? The amount of space taken up by the foster children will be used to reduce the foster-parent’s property tax exemption.
Is that fair? They say that no good deed goes unpunished and the penalty of having a big heart is certainly illustrated here.
The amount of the property tax seniors would have to pay because they’ve opened their home to grown children in distress and others could be considerable. Presently, if you are a senior in the Kenai Borough with a total assessment of $280,000, you would pay nothing in property taxes (since the Borough exemption cap is $300,000). The mill rate of roughly 10 mill/$1,000 would mean that you wouldn’t have to pay the $2,800 property tax assessed.
But, let’s say you get a call from your grown child, whose family has suffered a calamity (divorce, foreclosure, economic disaster, job loss, etc). Of course you open your house to them! They move in and take up half the living space. Now you will have to pay half of the taxes, or $1,400, because they are all ineligible. Again, no good deed goes unpunished.
Isn’t the purpose of government to improve and protect the welfare of the people? Shouldn’t government support the broken family that, for whatever reason, comes to live under the same roof with parents? Shouldn’t government recognize that the elderly who reside in a senior child’s home awaiting death are a blessing? Isn’t the family unit the nucleus of a strong society?
As it is, the senior property tax formula actually destroys and prevents what families need most: the strength and unity of the family unit and the care parents have, through the ages, given to both their own children (regardless of their age) and to the elderly parents of Alaska’s senior property owners.
I call for an amendment to the code to include elderly parents living with property-owning tax payers and grown children together with their own children, and seniors who serve as foster parents. If it’s a good idea, how can we get the code amended? If it’s just about Borough revenue, nothing will change. If it’s about compassion and protecting and supporting the family, it’s long overdue.