Expanding tax credits for aging in place

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Howard County Executive Allan H. Kittleman has proposed a bill that would expand a tax credit to help residents who are adapting their homes to “age in place.” The expansion of the preexisting Livable Homes Tax Credit is in response to recommendations from the county’s Commission on Aging.

Unlike deductions or exemptions, which reduce the amount of income subject to tax, tax credits directly reduce the amount of tax a person owes. And for those who do not owe taxes, tax credits are returned as a refund. Governments usually grant a tax credit to promote a specific behavior, in this case to allow residents to age safely in their homes.

The legislation filed with the County Council would amend the Livable Home Tax Credit to include a greater variety of projects that make it easier for seniors, as well as individuals with disabilities, to remain in their homes — such as accessible pathways between parking and residence, adding railings to hallways, installing slip-resistant flooring, and improving stair design.

Credit covers full cost

The tax credit allowed would be increased from 50 percent of eligible costs to the full amount of eligible costs, or a total of $2,500 per project, whichever is less.

There is an annual cap of $100,000 on the total credits that can be issued by the County, and that will remain unchanged.

Improving services and initiatives for the county’s older population has been a priority for Kittleman since taking office two years ago. He elevated the office of the Aging and Independence administrator to a cabinet-level position, and renamed “senior centers” as “50+ Centers” to accommodate growing services for all older adults, including aging baby boomers.

The county’s senior population continues to grow rapidly. In 2010, 10 percent of county residents were 65 and older. By 2025, this will increase to 18 percent, and by 2035, to nearly 22 percent.

The County Council is scheduled to vote on the expanded Livable Home Tax Credit bill on Feb. 6.

Other senior tax credits

In October, Kittleman also filed legislation regarding two other senior-related tax credits. With the expansion of the existing Senior Tax Credit, he proposed lowering the age for eligibility from 70 to 65, effectively expanding the potential number of property owners who qualify from 26,000 to more than 40,000.

Property owners eligible for this credit must use their property as their primary residence, have a combined gross income not exceeding 500 percent of the federal poverty guidelines for a household of two (approximately $80,000 for Fiscal Year 2017), and have a net worth not to exceed $500,000.

Kittleman also proposed creating a brand new tax credit, called the Aging-in-Place Tax Credit, which reduces by 20 percent the amount owed in property taxes on up to $500,000 of assessed property value for a period of up to five years.

Although it sounds similar to the Livable Homes Tax Credit mentioned earlier, the Aging-in-Place Tax Credit is a separate benefit. The idea behind the name is that, with less money owed in property taxes, older residents who have lived in the county for 40 years or more will have more money to focus on successfully aging in place.

Although the Maryland General Assembly had already passed state-wide legislation for this tax credit during the 2016 legislative session, local legislation was needed to make it available in Howard County. Both the legislation affecting the Senior Tax Credit and the Aging-in-Place tax credit were approved by the County Council on Dec. 5.

In the meantime, Kittleman has been in talks with Howard County State Senator Gail Bates to reduce the required amount of time lived in Howard County for the Aging in Place tax credit — from 40 years to 25 years — which would allow many more long-time residents to take advantage of this tax credit.

This discussion is ongoing, while the county waits for the state to approve the change.