What are property tax deferral programs?
The Oregon Legislature established programs that allow qualifying citizens to delay paying property taxes on their residences—including manufactured homes, houseboats, multi-family, and income-producing properties (e.g., home business). If you qualify for one of the deferral programs, the state will pay your property taxes to the county. A lien will be placed on your property. You will be charged lien fees, which are deferred. Interest on the deferred taxes, at 6 percent per year, is also deferred.
How do I qualify for a deferral?
Disabled Citizens' Property Tax Deferral:
- At least one joint property owner needs to qualify as an individual with disabilities.
- You must be determined eligible to receive or be receiving federal Social Security disability benefits due to disability or blindness on or before April 15 of the year you file the claim. You must send a copy of your federal Social Security award letter or statement of eligibility with your deferral application.
Senior Citizens' Property Tax Deferral:
- At least one spouse must be age 62 or older on April 15 of the year you file the claim.
- All joint property owners, other than spouses, must be age 62 on April 15 of the year the claim is filed.
If you are married and apply jointly with your spouse, you both must be 62 years old or older on April 15. If only one spouse is 62, you must apply as an individual.
Other requirements for both programs:
- Joint owners. Together you must own or be buying the property.
- You must have a recorded deed to the property. Or, you must be buying the property under a recorded sales contract. You may have a revocable trust. You are not eligible for a deferral if you have a life estate interest in the property.
- You must live on the property; however, you may live away from the property due to medical reasons. You must send a medical statement on letterhead from your health care provider to the Oregon Department of Revenue. Example: Mrs. Jones can no longer live in her home due to medical reasons (the exact medical condition is not needed).
- Household income must be less than $37,500 for the income tax year 2007. This includes taxable and nontaxable income including Social Security and pensions.
How do I apply for a deferral?
First, read the information about the deferral programs to help you decide if you qualify for one of them. Obtain a deferral application booklet from your county assessor’s office or the Department of Revenue’s website at www.oregon.gov/DOR/SCD. Complete the application provided in the booklet, Oregon Property Tax Deferral for Disabled and Senior Citizens. Instructions are in the booklet. Submit your application to the county assessor’s office between January 1 and April 15.
The county assessor’s office will send the Oregon Department of Revenue your application. The department will notify you in writing if your application is approved or denied.
Do I need to apply for a deferral each year?
No. You only need to apply for the deferral once, unless your spouse dies. (If you are a surviving spouse, see page 3.) Once your application is approved, the Department of Revenue will pay your 2008-09 property taxes that are due November 15 and all future taxes as long as you remain eligible.
How is the lien on my property recorded and valued?
Deferred property tax liens have the same priority as other real property liens.
The lien amount for the Disabled Citizens’ Property Tax Deferral is 90 percent of the real market value of your property at the time your original application was filed. The lien amount for the Senior Citizens’ Property Tax Deferral is an estimate of future taxes to be paid and interest to be charged based on life expectancy tables.
Do I qualify if I owe delinquent taxes?
Yes. You may have current and future taxes deferred, but are still responsible to pay any delinquent taxes to the county. You may qualify for a Delay of Foreclosure if you own real property. Floating homes and manufactured structures that are not real property do not qualify for the delay.
Your Delay of Foreclosure will be approved only if you are approved for the deferral program.
What if I have a reverse mortgage?
Having a reverse mortgage does not prevent you from qualifying for the deferral program. The money you receive from the reverse mortgage is not considered as “income” for deferral qualification.
Do I need to tell my mortgage company?
Yes. You should inform your mortgage company that the State of Oregon will be paying your property taxes if your mortgage company holds funds to pay the taxes. You may want to send them a copy of your deferral approval letter.
May I have my property tax deferral and a veteran's exemption?
Yes, you may have both. A veteran’s exemption will reduce the taxable value of your property. You may defer these reduced taxes through deferral. See information circular Disabled War Veteran or Surviving Spouse Property Tax Exemption, 150-310-676 for more information.
Is my yearly income important?
Yes. After your initial approval for the program, your federal adjusted gross income (FAGI) must stay below the annual FAGI limit. This limit may change each year. The FAGI limit for income tax year 2007 is $37,500.
What happens if my income exceeds the FAGI limit after the first year?
If your income exceeds the FAGI limit after the initial year of acceptance, you will be responsible for part or all of your property taxes for that year. The deferral amount will be reduced by 50 cents for each dollar over the $37,500 income limit. The balance of your account continues to be deferred. If your income falls below the FAGI limit in following years, all of your property taxes will be paid.
Example: If your FAGI is $39,500, your deferral amount will be reduced by 50 cents for each dollar over $37,500. You are $2,000 over the limit. At 50 cents on the dollar, your deferral is reduced by $1,000. If your property taxes are $2,500, the department will pay $1,500 of your property taxes and you are responsible for paying $1,000 to the county.
If your FAGI exceeds the limit by more than double your property tax bill, no taxes will be deferred for that year.
Example: If your FAGI is $42,500 and the current FAGI limit is $37,500, you are $5,000 over the limit. Unless your property taxes exceed $2,501, you will not qualify for a deferral that year.
How does my deferral account become disqualified?
- When you sell the property or it changes ownership. Example: You deed your property to your children.
- When you move permanently from the property, unless it is for medical reasons.
- When the applicant dies. If you are a surviving spouse, see below.
- The property is moved out of state (manufactured structures or floating homes).
The deferred taxes, plus interest of 6 percent per year, and the lien recording fees must be paid by August 15 of the calendar year following one of the above events. A repayment schedule may be arranged with the Department of Revenue.
Are you a surviving spouse?
You don't need to file a surviving spouse application if the following conditions apply. Your deferral account will continue, and Revenue will pay your property taxes.
- You and your spouse each qualified for the deferral. You both signed the original application as joint owners, and you were each 62 years old at the time the original application was filed.
- You continue to meet the qualifying requirements of the deferral program (see page 1).
If the above conditions do not apply and you were 59½ or older at the time of the taxpayer's death, you must meet the deferral requirements and file a surviving spouse application, even if you signed the original application. Once Revenue approves your application, the department will continue to pay your property taxes.
–or–
If you are younger than 59½ at the time of the taxpayer’s death, you may file a surviving spouse application. File your surviving spouse application with your county assessor’s office by April 15 of the year following the taxpayer’s death. Because of your age, your deferral account becomes inactive. The account balance remains deferred and interest on the past deferred taxes continues to accrue. By law, Revenue cannot pay your current and future property taxes. You are responsible for paying all current and future taxes to the county.
You may reapply to activate the deferral when:
- You reach age 62, or
- You become eligible to, or begin to, receive Social Security disability benefits, and
- You continue to meet the other deferral qualifications.
Once Revenue approves your application, your account becomes active again, and the department will pay your future property taxes.
If you choose not to file a new application by April 15 of the following year, your deferral account will be disqualified. The deferred taxes plus any accrued interest will become due.
What if you divorce?
A divorce may affect your property tax deferral. Please contact the Department of Revenue.
Can payments be made on the account?
Yes. You may pay all or part of your deferral account and continue to defer current and future taxes. Others (relatives or friends) may also make payments on your account if you do not object.
Make your payments to the Oregon Department of Revenue. Payments are applied first to accrued interest, then to past deferred taxes, and then to lien fees.
When the property is inherited, and the heir makes the property his or her principal residence by August 15 of the following year, a repayment schedule may be arranged with Revenue. Contact the Deferral Unit at 503-945-8348, fax at 503-945-8737 or e-mail deferral.unit@state.or.us.
Income tax information
If you file a federal income tax return and you itemize deductions on Schedule A, you may deduct the amount of property taxes the department pays to the county for that year. Deferred property taxes are deductible on an individual income tax return only in the year that the taxes are paid, not in the year the deferral account receives full payment.
Interest on the deferred property taxes is deductible as home mortgage interest in the year the interest is paid. Any payment amount applied to accrued interest is deductible in that year. If you pay off your deferral account, the total amount of accrued interest paid is deductible for the year in which the account receives full payment.
Multi-family or income-producing property?
- If you own and live in one unit of a multi-family building, the county assessor will determine the portion of property taxes that Revenue will pay. You will be responsible for paying the remaining portion to the county.
- If you have a business located on your property, the county assessor will determine the portion of property taxes that Revenue will pay. You will be responsible for paying the remaining portion to the county.
Deferral accounts accrue 6 percent simple interest each year
The 6 percent interest is simple, meaning that the interest computes yearly against the deferred tax amounts. Deferral accounts do not accrue “compound” interest, which is interest computed on previous interest plus the deferred tax amounts.
For example, if your property taxes were $1,000, the interest for one year would be $60 (0.06 × $1,000 = $60). Interest continues to accrue each year on the deferred tax amounts.
The department calculates interest annually after paying the deferred property taxes to the county (usually November 15).
The table below shows an example of five years of deferred property taxes and the simple interest that accrues during that time.
Property Tax Year
| Property
Tax Paid
| Deferred Tax
Running Balance
| Lien Fees
| 6% Simple Interest
| 2008–2009
| $1,000
| $1,000
| $40
| -0-
| 2009–2010
| $1,000
| $2,000
($1,000 + $1,000)
| -0-
| $60
(.06 × $2,000)
| 2010–2011
| $1,000
| $3,000
($2,000 + $1,000)
| -0-
| $120
(.06 × $3,000)
| 2011–2012
| $1,000
| $4,000
($3,000 + $1,000)
| -0-
| $180
(.06 × $4,000)
| 2012–2013
| $1,000
| $5,000
($4,000 + $1,000)
| -0-
| $240
(.06 × $5,000)
| Five Year Total
| $5,000
| $5,000
(5 years × $1,000)
| $40
| $600
($60+$120+$180+$240)
| Total amount owed after five years in the program = $5,640
($5,000 tax + $40 lien fees + $600 interest)
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Taxpayer assistance
General tax information
Salem: 503-378-4988
Toll-free from an Oregon prefix: 1-800-356-4222
Asistencia en español
Salem: 503-378-4988
Gratis de prefijo de Oregon: 1-800-356-4222
TTY (hearing or speech impaired; machine only):
Salem: 503-945-8617
Toll-free from an Oregon prefix: 1-800-886-7204
Americans with Disabilities Act (ADA): Call one of the help numbers for information in alternative formats.
Revised September 2007
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