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January 10, 2002: Senior Tax Exemption

Q: What happened to the senior tax exemption proposal that we voted on last year? Did that not go through?

A: In 2000 the voters amended Section 3.5 of Article X of the Colorado Constitution. Beginning January 1, 2002, for property taxes accruing in 2002 (payable in 2003), the state of Colorado will pay half (50%) of any such amount on the first $200,000 of the actual value of the real estate.

To qualify for 2002, a person must be 65 years or older as of January 1st and have owned and occupied the real estate as his or her primary residence for ten years. The actual application must be submitted on or before July 1st and can be obtained at the local county Assessor's office or Treasurer's Office. Once approved, the exemption remains in effect and there is no need to file yearly.

The test of a primary residence is the same as for voter registration or motor vehicle registration it must be one's primary, fixed habitation or abode. The statute does not flatly say so, but if the application lists an address differing from the one used for car registration or for voting, then qualifying for the exemption could be very difficult.

The property must have been owned and occupied for ten years and may be owned along with certain other people, such as a spouse or children. Property may be title in a trust, a partnership, a corporation, etc. but the qualifying person must be the "principal" beneficiary or owner, and the arrangement must have been done for estate planning reasons. A life estate interest would also qualify.

The continuous 10-year rule for occupation may be interrupted for such things as hospitalization, a nursing home, assisted living, etc. but only if the qualifying person had the "intent" of returning, even if such an expectation was totally unreasonable. The property must remain either unoccupied or occupied by the spouse. Condemnation would also be an exception to the 10-year rule.

Only one person in the couple needs to qualify. If two people are married and each would otherwise qualify, only one exemption is allowed. If more than one piece of real estate is owned, only one parcel would qualify, by definition.

If the qualifying spouse dies, the non-qualifying widow or widower may still obtain the exemption but must submit another application for consideration. If the survivor remarries and otherwise would not qualify on his or her own, then the survivor loses the exemption.

There are penalties if someone wrongly obtains approval or does not report a change which would otherwise disqualify him or her. However, the punishment seems to amount only to second-degree perjury, payment of the taxes that the state of Colorado picked up, and then payment of twice the amount of such taxes, along with interest.

For more details, the State of Colorado and the Colorado Bar Association have put together a brochure which should be available before July 1st.

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