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Tax Deferral Program Overview for Elderly or Disabled Residents

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On May 2, 2006, the County passed an ordinance which allows certain elderly or disabled homeowners to defer a portion of their County property tax. For people who qualify, this program is available in addition to the Homestead Credit and the Homeowner's Tax Credit.

The deferral program is open to Cecil County homeowners who are 65 or over or are disabled. The property for which the deferral is sought, must be the permanent residence of the applicant and the applicant must have lived there for at least 5 years. In order to qualify, the combined gross household income cannot exceed $60,000. "Gross household income" includes the income from ALL residents of the home from ALL sources. For example if you are 66 and your grown child has moved home, you must show his / her income as well as your own. Social Security must be shown even if it is not taxable for income tax purposes.

The deferral is applicable to the County tax only and is granted on the "homestead" (your house and yard) only. Extra acreage or other real estate holdings are not eligible. No interest is charged on the deferral, but it must be repaid eventually. To ensure this, a lien is placed on the property at the time of approval.

The amount that can be deferred is limited to the increase in tax from what the homeowner paid the previous year. For example in if your taxes were $1,000 in 2005 and went to $1,100 in 2006, you could defer $100 as long as you met the qualifications. If it increased to $1,200 in 2007, you could defer an additional $200 ($1,200 - $1,000). At that point, the cumulative deferral would be $300. The total deferral is limited to no more than 50% of the assessed value of the property.

When the deferral ends, all taxes are IMMEDIATELY due and payable. Following are situations where the deferral would end:

  1. When the qualifying homeowner ceases to own the property, as in the case of death or sale of the property. In the event of joint ownership of the property, the remaining owners would be responsible if the qualifying homeowner could not pay (as in the case of death).
  2. When the qualifying homeowner ceases to occupy the property as principal residence.
  3. If the property becomes subject to tax sale.
  4. If income exceeds $60,000.
  5. If the homeowner fails to file an application in the next year.
  6. If ended by written notice from the homeowner to Cecil County Finance Office.

It is important to remember that if any of these events happen, the taxes are immediately due and payable and if not paid, the property will become subject to tax sale.

Many of the people who qualify for the deferral will also qualify for the Homeowner's Tax Credit, which is a better program for most people as this money does not need to be repaid. The Homeowner's Tax Credit is discussed at length in another area of this website.

Applications for both the Homeowner's Tax Credit and the Deferral Program are available in the Cecil County Finance Office. Additionally, the application for the Deferral Program can be found on this website. Homeowners may also call our office and we will be glad to send an application to either program. Once you have received the application, complete it along with the required documentation and return it to the Cecil County Finance Office for review and processing. All owners listed on the deed must sign the application even if they do not reside in the home. If the application is approved, we are required to place a lien on the property and notify any mortgage company involved. Homeowners should be aware that their mortgage company MAY have a provision that all taxes must be paid in full, thus negating the deferral. Homeowners are advised to check with their mortgage company.

The application must be in no later than September 1. Due to the timing of this program, we will not be able to deduct the credit from the July tax bill. However, if you qualify, you may either delay payment of your tax bill or, if you choose to pay, we can send a refund. Please keep in mind that if you delay payment, then interest may accrue on unpaid taxes after September 30.