Learn More About Property Taxes
Q. What Property is Taxed?
A. Both real (land and buildings) and personal property (tangible goods) are subject to taxation, unless they are exempted by law or subject to another form of taxation, such as the excise tax for motor vehicles and boats. The property tax bill for most Maine homeowners is based on the value of the land, the house, and the outbuildings (sheds, pools, garages etc.…). Local assessors are required by law to "ascertain as nearly as may be the nature, amount and value as of the first day of April of the real estate and personal property subject to be taxed . . ." This means that if on the 1st day of April you own property that is subject to taxation, then you are liable to pay those taxes to your municipality.
Q. How is Property Assessed?
A. The Maine Constitution says that property shall be assessed according to the "just value” thereof. The courts have interpreted "just value" to mean fair market value or in other words "what the property is worth." A property’s worth is commonly looked at as "what a willing buyer would pay a willing seller" for a particular piece of property.
Finding the market value of your property involves discovering the price most people would pay for it in its present condition. It's not quite that simple, however, because the Assessor has to find what this value would be for every property, no matter how big or small. But the Assessor's job doesn't stop there. Each year it has to be done all over again, because the market value of almost everything changes from one year to the next-as we all know.
Determining the market value of property is no easy task. Local assessors use three basic methods to determine a property’s worth. The most commonly used method determines how much it would take at the current price of materials and labor to replace a building, then subtracts out how much the building has depreciated. A second method compares the selling price of similar types of property. The third assessment method evaluates how much income the property would produce if it were rented, like an apartment house, store or factory. One, two or all three of these methods might be used to help the Assessor determine the fair market value of your property. It is also important to note that land and buildings are valued separately.
Q. Why do Assessed Values Change From Year to Year?
A. When market value changes, naturally so does assessed value. In order to keep property values at fair market value it may be necessary to adjust assessed values. Improvements to your property will also increase your assessment. For example, if you were to add a garage, shed, pool, or do some renovations to your home, the assessed value would increase. However, if your property were to become in poor repair, the assessed value may decrease. The Assessor does not create value - PEOPLE MAKE VALUE by their transactions in the marketplace. The Assessor simply has the legal responsibility to study those transactions and appraise your property accordingly. An update of assessments town wide is conducted on an annual basis in an effort to maintain equity in assessments.
Q. How is the Property Tax Rate Determined?
A. The Assessor has nothing to do with the total amount of taxes collected. The Assessor’s primary responsibility is to find the fair market value of your property, so that you may pay only your fair share of the taxes. The amount of tax you pay is determined by a TAX RATE, which is applied to your property's ASSESSED VALUE. In calculating a property tax rate, the legislative body of the municipality (town meeting or council) determines the amount of revenue to be raised by the property tax to fund municipal services. The Assessor then divides that amount by the total local assessed valuation to get the local tax rate. The Assessor calculates how much must be raised in property taxes based on what the legislative body has approved. A tax commitment listing all the property in town, its value and the taxes that are owed is then signed by the Assessor and given to the Tax Collector who sends out the tax bills.
Q. What Property Tax Relief is Available? A. There are several forms of property tax relief available to Maine residents.
Homestead Exemption: The homestead exemption reduces the property tax bill of all Maine resident homeowners who apply for the exemption by April 1st and who have owned and lived in their house for the prior 12 months. The exempt amount is deducted from the property’s total taxable value and is adjusted by the community’s certified ratio of valuation to actual market sales. The homestead exemption amount is currently $25,000.
Veteran’s Exemption: Any Maine resident who was in active service in the armed forces of the United States during a federally recognized war campaign period and, if discharged or retired under honorable conditions, may be eligible for a $6,000 reduction in valuation (adjusted by the community’s ratio of valuation to actual market sales). The veteran must have reached age 62 or must be receiving a pension or compensation from the United Sates Military for total disability, either service or non-service connected. Applications can be obtained in the Assessor’s Office and must be filed with military discharge documentation on or before April 1st of the year it will go into effect. This exemption also includes the unremarried widow or widower or minor child of any veteran who would be entitled to the exemption if living, or who is in receipt of a pension or compensation from the Federal Government based upon the service-connected death of that parent’s child.
Blind Exemption: Any Maine resident who is certified to be legally blind by their eye care professional are eligible for a $4,000 reduction in valuation (adjusted by the community’s ratio of valuation to actual market sales).