There are many things to love about owning a property in Maine, but property taxes are not generally one of them. It is just one of those things that must be done, and unless your ongoing mortgage payments cover it, the responsibility falls to you.
It is vital to pay your property taxes in full and on time, but it helps to understand how your bills are calculated to be better prepared for your annual payments. This is especially important for property management accounting, if you're a landlord, investor, or property manager.
This comprehensive guide to property tax in Maine covers how, when, and what to pay, as well as some insight into how rates are calculated and some ways you could potentially qualify for a reduction.
Read on to learn how you can plan ahead with your property taxes and maximize your profits.
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Understanding How Property Tax Works in Maine
Property tax in Maine is determined by the value of your home and the local tax rate in your county. There is no state-wide policy or figure, and the amount you owe can change from year to year.
The numbers are worked out using mill rates and percentages based on the just value of your property as set by local assessors, rather than market value specifically. We will go a little more into detail on how exactly things are calculated a little later.
How Often Are Maine Property Taxes Due?
Luckily for Maine property investors and owners, you only need to worry about paying taxes once a year. Your property tax bill is due to be paid in September of every year.
Some parts of the state allow you to split the payment into two installments. The exact due dates vary, though. For example, in Brunswick, the first installment is due October 31, while the second is due April 16.
There is technically no grace period on property tax payments for Maine residents, but a notice will be sent giving you 30 days to respond with full payment of your tax bills. You do have some time to pay your debts before there are any major consequences.
What Are the Consequences of Paying Late?
Speaking of consequences, there is a great reason to make sure you pay your real estate taxes on time in Maine: failure to do so could result in you losing your property.
When a property tax bill goes delinquent (i.e., it is not paid on time), the amount becomes a lien on the property. Maine is a tax deed state, meaning the taxing authority has the right to sell the home, or a portion of it, to recover the debt.
This happens in a tax sale, which can happen quite soon after your taxes become delinquent. Luckily, you have two years to pay back what you owe before the person who bought your property lien receives the deed. If you do this, the sale is reversed and you get to keep the property.
To repay the debt, you must also cover the fine, which is 8% per year from the date of the sale. This rate changes from year to year, so it is best to check beforehand for the most recent update.
Tax Sale Notification Laws
Before your property is put up for sale to recover delinquent taxes, you will be notified. This must happen at least 10 days before the sale happens. The tax collector will notify you in person, by mail, or via a notice left at your property.
In the notice, it must inform you of the time and place that the sale will happen. If you pay what you owe before the sale is due to take place, it will be canceled.
How to Pay a Property Tax Bill in Maine
Maine homeowners can pay their property taxes online through the Maine.gov ePayment portal using a bank card.
Alternatively, they can send a check by post or pay by cash or card at their local county office.
What Are the Property Tax Rates in Maine?
Tax rates vary from county to county since each area is responsible for determining how much to charge homeowners. Individual municipalities set budgets and base the tax rate on how much income they need to generate.
The average property tax rate in Maine is 1.09%, which is only slightly higher than the national average of 0.99%. It equates to an average of $2,756 per year. That said, how much you need to pay will largely depend on what part of the state you live in and your total home value.
Here are some local tax rates for Maine counties.
Androscoggin County has the highest property tax rate in Maine at 1.65%. The average property tax bill in the county is around $2,750.
At the other end of the scale, you have Hancock County, the lowest tax county for homeowners in Maine. The rate here for property taxes is just 1.03%, but because the home values are quite high, the average annual bill is $2,240.
Maine's most populous county, Cumberland County, is also the county with the highest median home value and the highest property taxes. The rate is actually not the highest, sitting at 1.46%, but because of the higher home values, the average annual payment is just over $4,200.
The cheapest property tax bills in Maine are in Pitcataquis County, coming in at around $1,400. It does not have the lowest tax rate, but at 1.26%, it is at the lower end of the scale.
How Are Maine Property Tax Rates Calculated?
Maine property tax rates are set by the legislative body of local municipalities. They determine how much revenue they need to generate, and apply taxes based on their budget. These rates apply to all properties in a category in that area, but you much your bill will be comes down to the assessed value of your home. That is where local assessors come in.
Although they have nothing to do with setting the local tax rate, what they determine to be the fair market value of your property directly impacts how much you have to pay.
As assessor will appraise the properties as fairly as possible, something that is usually done at least once every 10 years, often much more frequently. They aim to calculate how much the property would be likely to sell on the market at that time.
Once the market value is determined, the assessment ratio for your property category is applied. Residential properties in Maine have an assessment ratio of 70%. That means that the assessed value of your property is 70% of its market value.
Maine Property Tax Calculation Example
What does this all mean for your taxes?
Let's say the fair market value of your home is $200,000. The assessed value would be $140,000. That is the amount that is taxed based on the rate set by your local municipality council.
Tax rates in Maine are usually expressed as a mill rate, meaning the dollar per $1,000 of the assessed value. It can also be shown as a percentage of the total value. The easiest way to calculate your property tax is assessed value x tax percentage.
If the tax rate in your area is 1.25% and the assessed value of your property is $140,000, the calculation would be as follows:
$140,000 x 1.25% = $1,750
This means your annual property tax (assuming you do not qualify for any exemptions, such as a homestead exemption) would be $1,750. If you qualify for an exemption, the amount is deducted from the assessed value before calculating the percentage.
Is There a Way to Lower Your Property Taxes in Maine?
Maine residents and homeowners may be eligible for lower property taxes if you qualify for one of the four main exemptions. Here is an overview of each one.
The Maine homestead exemption can reduce your property's taxable value by up to $25,000.
Exemptions are potentially available to anyone who is a full-time resident of Maine, uses the property in question as their primary residence, and has owned a home for at least 12 months in the state of Maine before applying for the exemption.
You can apply for Maine's homestead exemption through the local municipality office where your home is located, but you have to submit the application before April 1st for it to be considered.
Senior Citizens Exemption
The municipal property tax deferral for Maine homeowners who are senior citizens helps low-income seniors keep their homes by providing relief and deferring tax payments. The exact ins and outs depend on age and circumstance. More information can be found through your local municipality office.
Any veteran aged 62 or older who served during a recognized war period can gain a $6,000 tax exemption on their property's assessed value. It also applies to disabled military veterans of any age whose disability is a direct result of their service.
People registered as legally blind by an eye care professional qualify for a $4,000 exemption (exact rates can vary in some counties) from the assessed values of their properties.
Buying and owning property in Maine is an attractive investment to many, but to keep the property, you must pay your property taxes. Understanding how things work, what your responsibilities are, and how and when to pay can help you stay on top of things and avoid the threat of losing your home.
Be sure to stay informed of any changes in your area and keep track of the mill rate for your county. That way, you will be prepared for the bills when they come.
And if you have any questions, consult with a tax professional or your assessor's office.
If you're looking for more tips on property management accounting, check out our whitepaper on the best tips for simplifying this complex process.