Real Estate Tax senior deferrment

[cs95397049]

Oregon offers a real estate tax deferment at 6% interest. I figure that would put a lein against my home at about $2800/yr.  What is the downside of doing this? Will it negative affect my credit rating?

[Brightpool]

The tax deferment appears to be a way for the State to provide you with a loan against your house similar to a reverse mortgage. One big difference is that you are limited to borrowing a percentage of your tax obligation. Reverse mortgages have their own way of determining limits.

At 6 percent interest, you might want to check on other ways to meet your tax obligation if you must borrow and can qualify for a loan elsewhere. Do you already have a mortgage against your house? If your house is paid for, you might consider taking out a different mortgage, either first or second, if you can get a lower rate and if you are sure you can pay it all back before your next tax bill becomes due.

I cannot second guess your financial situation, but I'd suggest this program should be considered nearly the last resort to saving your home. If you can sell and downsize, I'd even consider that before using the tax-deferment loan from the State. If you default on the tax loan, they could conceivably foreclose through the required lien and leave you with nothing. The State law might provide for their returning to you proceeds from the sale of your house in surplus of the lien and its fees and interest, but I don't know about those laws in Oregon.

Good luck with your decision. Seriously needing to consider the State loan against your county taxes doesn't sound like a good place to be. If you are at this place, I think your credit rating is one of the least your worries.

[GailL1]

I am not from Oregon and had never heard about this sort of deferral but did do some reading.

At first thought, I felt that this could open the door to increasing property taxes with little debate if many older citizens are eligible for this type of deferral. 

2020 Oregon Property Tax Deferral for Disabled and Senior Citizens 

If I remember what I read, In Oregon, income level has to be below $ 46,000 (2020 eligibility) and any & all income and benefits are counted.  Net worth $500,000 or less but I don't think this incuded the subject property.  So the eligibility is inclusive of people who are not just poor.

In my state and locality, we give a rather substantial extra exemption off the property valuation to seniors and the disabled.  We also give another exemption if their income is less than a certain amount per year.  These reduce the overall tax bill and it does not count other possible assets.

I find it kind of ironic that you ask about this type of deferral and then ask about the effect it may have on your credit.  They do ask for your Social Security number and it is a loan - so it is my guess that it will be added to your debt load and thus may affect your credit standing somewhat.

This could be an escalating amount too- $2800 this year, but as values and tax rates increase it could go to higher amounts per year; increasing the amount that will have to be paid back.

Course if you are dead, paying it back may only be a problem for your heirs.

But what about if you decide to sell while you are still alive - it will reduce any equity that you have built up in your property.  What if you decide to sell and move to some long term care facility - the amount having to be paid back could be a month or two or more of your cost in the facility.  Or if you want to hire someone to care for you in your home in later years - it will be hard to get a Home Equity Line of Credit to use in this regards if the deferral amount is not paid back and it has increased substantially through the years.

I beliecve it said that an applicant has to requalify every (2) years for continuation in the program.

Personally, if I have equity in my home, I would rather use it with no strings attached.  A Home Equity Line of Credit based on the equity that is available could also pay the property taxes from year to year and give the owner a chance to pay it back with lower interest and build their credit score at the same time.

Since Baby Boomers are going to be such a huge population demographic in the coming years, I wonder how much this type of deferral might add to the property taxation rate in Oregon and these other states as time goes by.  Is it going to become an overwelming amount?

I found this article - you might want to review Oregon's program compared to others.

MSN 02/21/2019 - States Where Older Homeowners Can Defer Property Taxes 

Good luck in your decision.  Personally, in my situation, I wouldn't do it; I have many alternatives to use - but everybody has different situations.