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Property ownership issues

To: New property owner
Ref: Property ownership issues explained.

Who gets the tax bill? 
From time to time, confusion exist as to who actually should receive a property tax bill.

State of Maine law clearly states that each property must be assessed to the last known owner of record as of April 1st of each year. Therefore, all tax bills go to the owner of record as of April 1st of the tax year.

Per city policy we do not mail tax bills to banks, mortgage companies or any other third party. Our Tax Collector does produce electronic reports for mortgage holders who ask for billing information, but they do not get your bill.

If your taxes are paid by a mortgage company or other third party, you are responsible for forwarding the tax bill to them.

What happens when I sell my home?
If the sale of a property occurs before April 1st, there should be no confusion as to the owner of record. The City of Saco will receive notice from the Registry of Deeds that the property has been sold, and we will assess the new owner of the property. The owner of record will get their own tax bill for the ensuing year.

What happens should the sale of a property occur after April 1st?
This is when things may get confusing. If you owned your home as of April 1st, you are assessed for the entire tax bill. The assessment of these taxes in your name creates a liability. Therefore, it is very common (at the closing of a property sale) for the April 1st owner to request the new owner pro rate the tax bill based on the city or town's fiscal year. The theory being that the old owner is moving on and will not be around to use the city services, while the new owner will be so he or she should pay the appropriate portion of the taxes due on the property.

This proration of taxes has been going on for years and in most cases works fine. A word of caution to the seller: the agreement of proration of taxes is a civil contract and will not shift your liability to the new owner. The new owner's liability starts the April 1st of the following year. If the current taxes are not paid, the Tax Collector must file a lien in the old owners (sellers) name because they were the owner of record as of April 1st. Our Tax Collector will make every effort possible to notify both parties as to any past due taxes prior to the formal lien process.

It would make sense, then, to make sure the new owner pays the taxes he or she agreed to in the civil contract. Remember - it is your good credit that is on the line!!!!!!!

What is the difference between the tax year and the fiscal year?
Tax Year:
The tax year is easy to understand as it's really one day, April 1st of each year. Maine law refers to this day as the tax year, but many other states call it the "tax date". This date (April 1st) is used for three primary reasons: 1. Sets the ownership of record date.
2. Sets the valuation date.
3. Sets the taxable status of property and if any exemptions apply.

Fiscal Year:
Saco's fiscal year runs from July 1 to June 30. These dates are important for many reasons, but what is most concerning to a property owner is: "How much is my tax bill and how is it calculated?"

The tax rate for Saco is set in July. The tax rate is the dollar amount per thousand of valuation. You can calculate your tax bill by multiplying the total taxable value of your property by the current tax rate. This is your tax liability for the fiscal year July 1st to June 30th.

(Note): The calculation formula below is for illustration purposes only. You will need to use the current tax rate and property value in order to calculate your correct tax bill amount.

Total Property Assessed Value: $200,000
Homestead Exemption Value: $- 20,000
Equals "Taxable" Assessed Value: $180,000
Taxable Assessed Value: $180,000
Example Tax Rate: $x.01858
Equals Tax bill amount: $3,344.40

Saco property taxes are set each year by City Council. Property taxes in Saco are billed in two installments (first half due date is in August and second half is due in February). In terms of time periods of coverage, the first half bill covers July 1-Dec 30, and the second half bill covers from Jan 1-June 30.