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September 14, 2009

October 15 Is Deadline to Apply for Homestead Preservation Credit

JEFFERSON CITY - Qualified senior citizens and disabled people have about one month (until Oct. 15) to apply for a tax credit that could reduce how much they pay in property taxes on their homes.

The Homestead Preservation Credit (HPC) program provides a real estate property tax credit for homeowners who are 100 percent disabled or who are age 65 or older (as of Jan. 1, 2009), and meet certain income and other requirements.  Those who successfully apply will receive a tax credit that equals the amount that their property tax bill increased after excluding the first 2.5 percent in growth.  In 2008, there were 11,077 successful applicants who received $2.4 million in property tax credits, for an average credit of $222.

"The Homestead Preservation Credit program is one way the state provides tax relief for senior citizens and the disabled when local property taxes go up," said Gov. Jay Nixon.  "I encourage all who are eligible to apply so that they can receive the benefits of this program."

Those interested in obtaining the tax credit must apply by mail to the Missouri Department of Revenue by October 15, 2009.  In addition to the requirements already mentioned, successful applicants must also:
     *Own and live in the property for which they are claiming the credit;
     *Have a 2008 federal adjusted gross income of $77,254 or less; and
     *Submit copies of their paid real estate property tax receipts for 2006, 2007 and 2008.

If married couples apply for the credit, at least one of the spouses must be 65 or older and the other spouse must be at least 60 or older.  Properties owned by two or more unmarried people are also eligible if all of the owners meet the eligibility requirements and if their combined income does not exceed $77,254.  The program also includes property held in trust.

In addition, if a property was improved to accommodate a disabled person, the property qualifies even if the improvements are valued at more than 5 percent of the homestead's value.  Normally, home improvements made during the year that total more than 5 percent of the property's appraised value disqualify the property's owners from being eligible for the HPC.

Successful applicants do not receive a refund check from the state or a local government.  Instead, the program creates a credit on the applicant's property tax bill in the following year.  For example, if a person files an HPC application in 2009, the credit will be applied to his or her 2010 property tax bill.

Persons who already received the Property Tax Credit ("Circuit Breaker") for 2008, can't apply for the 2009 HPC. To see which program is most beneficial for this year and the future, go to the eligibility charts for the two programs at http://dor.mo.gov/tax/personal/homestead/flowchart.pdf and http://dor.mo.gov/tax/personal/ptc/proptax.pdf

If an applicant meets the qualifications, the timeline below shows the process through which a person would receive the credit:

Today-Oct. 15, 2009:  Applicant submits application, including proper documentation, to the Department of Revenue.

October-November 2009:  The Department reviews applications to determine eligibility.

Dec. 15, 2009:  The Department sends a list of all verified eligible owners to local county assessors.

January 2010:  The Department compiles information on successful HPC applicants for appropriation request and provides to the Missouri Legislature.

May 2010:  The Legislature appropriates money for the HPC.  (Since the program requires funding from the Legislature, the credit is not guaranteed.  If it is not fully funded, eligible applicants' credits will be prorated.)

August 2010:  The Department notifies local assessors and collectors of the amount of applicants' credits.

October 2010:  Local collectors receive wire transfer or check totaling the tax credit amount for all eligible property owners in their county.

November/December 2010:  Eligible applicants receive real estate property tax bill from county collector, and the bill shows the amount of the HPC credit for the taxpayer.

Application forms can be obtained on the Department's website at http://dor.mo.gov/tax/misc/forms/hpcf.pdf or from a tax professional.  Forms can also be requested by calling (800) 877-6881.

To obtain answers to questions about the program, send an e-mail to homestead@dor.mo.gov; consult the department's web site at www.dor.mo.gov/tax/personal/homestead/; or call (573) 751-3505.