With high property tax burden, lawmakers look to alleviate costs
Published: 12-28-2024 9:00 AM |
Sanjeev Manohar had never knocked on a door asking people to vote for him before. So as he hit one after the other in Nashua during his campaign for state representative, he had a policy pitch prepared.
He’d champion women’s rights if he was elected to the State House. He’d use his background as a professor to inform decisions on education, he was prepared to tell his future constituents.
Instead, voters had an overwhelmingly repetitive question for him: “Our property taxes are going up, the valuation is going up… So what would you do as a legislator for us?” he said. “Their main point was affordability. I called it the Roe v. Rent election. Rent won.”
Manohar, a Democrat, was honest. He didn’t have an initial answer. So he went back to a few households to do his homework.
“They were all either senior citizens or folks with disabilities. What they’re saying is this is the city’s attempt to kick us out of our property,” he said. “‘We are on a fixed income. We have to pay, and if we can’t pay we move out.’”
New Hampshire state law allows local government to seize and sell property for unpaid taxes after three years. A Monitor series, Seized and Sold, found this hits the elderly, disabled and those who had paid off their homes the hardest. One missed payment can lead to spiraling months of debt, with interest penalties compounding to no end.
Ahead of the 2025 legislative session, New Hampshire lawmakers have a number of solutions to address property tax costs. Some would like to see changes to credits and exemptions offered. Others, think new tools, like homestead exemptions or luxury tax surcharges, could help offset the burden.
While lawmakers look for solutions in the State House, Governor Chris Sununu will close out his time in the corner office with violations of pandemic-era executive orders that the state declined to enforce. Despite a moratorium on seizing and selling homes for unpaid taxes, through the state’s tax deed law, towns and cities across New Hampshire continued to do so anyway without consequence or clear guidance from the state, records show.
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The governor’s office and Attorney General’s Office declined to answer questions about the impetus for the order or its enforcement for a Monitor story in June. In response to the story, a spokesman for Attorney General John Formella stated that the office still had no comment and declined interview requests.
Manohar didn’t know much about the legislative process when he was elected. His race was decided by a recount and he’s spent December afternoons wandering the State House halls to be prepared for the January session.
He even ran into Sununu late one Friday and they bonded about their shared backgrounds as engineers.
To find a solution to property tax concerns, Manohar treated it like a systems issue. That meant starting by studying what was already offered.
Exemptions and credits are the main source of relief for homeowners, aside from a scant Low and Moderate Income Property Tax Relief program – which deducts from a small portion of a resident’s tax bill.
The program is offered to single residents who make $37,000 or less or households whose annual income is no more than $47,000.
To him, these cutoffs excluded most of the residents he spoke with.
He decided to engineer a solution. He’s proposed providing relief as a percentage of a household income. A person who earns less than $50,000 would not pay more than 5 percent of their income in property taxes. For homeowners in a $50,000 to $70,000 bracket, tax bills would be limited to 7 percent of their annual income.
He already knows representatives will be hesitant, countering with concerns about making up lost revenue for towns. But at face value, the idea will start a conversation about if and how that can be done.
Mike Moffett, a Loudon Republican, sees property tax relief as a song and dance.
When a town gives relief to a specific homeowner in need, that’s lost revenue to a town and other residents foot the cost, he said.
“That’s a yin and a yang, especially New Hampshire as much or more than any other state given our reliance on property taxes,” he said. “Any tax combination has its pluses and minuses, winners and losers, inevitably. In New Hampshire, the people who really get smacked, more so than others, are people on fixed incomes.”
To make up the lost revenue, Manohar proposes a patchwork solution – 10 percent of state lottery earnings and additional surcharges on home sales above $1 million.
Moffett would agree that homeowners need property tax relief. He himself is a recipient of a veteran’s tax credit.
At least for disabled veterans, he hopes to alleviate those costs.
Currently, New Hampshire law has a standard veterans tax credit, which awards a $700 deduction from bills for residents who are permanently disabled from their service, as certified by the United States Department of Veterans Affairs.
Municipalities can vote to adopt a higher credit, up to $4,000, which is decided by city councils or voters at Town Meetings.
Moffett’s proposal, which is co-sponsored by a handful of House members and State Senator Howard Pearl, also a Loudon Republican, would relieve 100 percent of the property tax bill for disabled veterans.
“It’s short and sweet,” he said.
Exemptions and credits are available for people with disabilities, those over 65 years old, and veterans. The low and moderate-income program does not have an age restriction.
To Ellen Read, a Newmarket Democrat, the state’s reliance on property tax can be a hindrance to owning a home.
She knows this firsthand.
Read moved to New Hampshire fifteen years ago with the goal of buying a house.
At the time, she said listings were relatively cheap – “before our current insane crisis” – and she qualified for a mortgage. When she added in the monthly property tax payments, her monthly costs nearly doubled.
She’s continued to rent since.
Similar to Manohar, Read thinks those protections should expand to residents who own homes below median values in their community, through a homestead exemption.
“We can tax people out of their excess but not out of their ability to live, is my philosophy,” she said. “A homestead exemption [would] allow people to be able to live without being taxed into oblivion.”
Read’s bill would establish an optional exemption for municipalities to adopt. The formula is based on both the town’s median assessed value and a homeowner’s annual income.
To calculate the exemption, towns would subtract a homeowner’s property value from the median assessed town value. The property owner would then not pay taxes on that difference.
As New Hampshire looks to retain young residents and grow business, both Read and Manohar point to property tax relief as a hindrance to achieving those goals.
To Read, a young, working adult should not only have the chance to purchase a home in the state, but be able to pay down a mortgage each month, keep up with their property taxes, and not have similar fears return when they reach retirement.
“Our property taxes are ridiculous. It’s low taxes if you are wealthy because you end up paying less in your property tax than you would in a state income tax,” said Read. “If you’re just a working-class person who wants to live in a home like the majority of us, it’s not low taxes because we end up paying far more in property tax to subsidize the wealthy.”