An Act To Establish a Local Option Real Estate Transfer Tax for Homestead Tax Relief
Maine Legislature, Session 123, LD 1649
Committee: Taxation
Sponsors: WOODBURY
Amends: 36 MRSA §683

Legislative Document 
No. 1649 
H.P.1158 
House of Representatives, March 22, 2007 
An Act To Establish a Local Option Real Estate Transfer Tax for 
Homestead Tax Relief 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative WOODBURY of Yarmouth. 
Printed nn recycled pi'pef 
1J1~ 
/h.7IltU~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 36 MRSA c. 712-A is enacted to read: 
CHAPTER 712-A 
LOCAL OPTION REAL ESTATE TRANSFER TAX 
§4681. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. Other terms have the same meanings as in chapter 711-A. 
1. Eligible property. "Eligible property" means a unit of real property designed to 
be occupied as a residence by a single family. 
2. Local option real estate transfer tax. "Local option real estate transfer tax" 
means the real estate transfer tax imposed by a participating municipality on eligible 
property pursuant to section 4682. 
3. Participating municipalitv. "Participating municipality" means a municipality 
that elects to impose a local option real estate transfer tax pursuant to section 4682. 
§4682. Imposition and collection of local option real estate transfer tax 
A participating municipality may impose a local option real estate transfer tax of up 
to 2% on the transferor of eligible property. The local option real estate transfer tax must 
be collected in the same manner and at the same time as the tax collected pursuant to 
section 4641-B, subsection 1. The tax imposed pursuant to this section is in addition to 
the real estate transfer tax imposed pursuant to section 4641-A. 
§4683. Determination and payment of municipal share; administrative costs 
On the last day of each month, the register of deeds shall identify the amount of 
revenue under this chapter attributable to each participating municipality, based on the 
location of the properties being transferred and the amount of tax collected under section 
4682 for those properties, and certify the net amount due the municipality to the county 
treasurer. Each county treasurer shall, on or before the 10th day of each month, pay over 
to each municipality that municipality's share of the tax collected pursuant to this chapter 
for the previous month. If the tax collected is not paid over by the 10th day of the month, 
the municipality may impose interest pursuant to section 186. 
§4684. Use of revenue for homestead tax relief programs 
Funds received pursuant to section 4683 by a participating municipality must be 
managed as prescribed in this section. 
1. Use for homestead tax relief. Each participating municipality shall deposit the 
revenue received pursuant to section 4683 in a segregated account. Funds within the 
segregated account must be disbursed to: 
A. A municipal property tax assistance program established within the municipality 
pursuant to chapter 907-A; 
B. A local option homestead property tax exemption program established within the 
municipality pursuant to chapter 907-B; or 
C. Fund that portion of the municipality's approved homestead exemptions under 
chapter 105, subchapter 4-B not recovered from the State pursuant to section 685, 
subsection 2. 
If the municipality does not have either of the programs listed in paragraphs A and B, 
then the municipality shall use the funds received pursuant to section 4683 for the 
purpose specified in paragraph C. 
2. Prohibited use. A municipality shall determine its annual budget and assessment 
without consideration of the amount received pursuant to section 4683. 
Revenue 
generated pursuant to this section may not be used to supplant local funds. 
§4685. Referendum 
The question of whether to impose a local option real estate transfer tax, the amount 
of the tax and the use of the revenue must be submitted to the legal voters of a 
municipality that seeks to impose the local option real estate transfer tax. 
The petition process and the voting at elections must be held and conducted in 
accordance with Title 30-A, sections 2528, 2529 and 2532 even if the municipality has 
not accepted the provisions of section 2528. 
The voting at elections held in 
municipalities must be held and conducted in accordance with Title 21-A. The municipal 
clerk shall make a return of the results, certify the results and send them to the Secretary 
of State. The Secretary of State shaH forward the results to the register of deeds for that 
municipality. 
The local option real estate transfer tax may be discontinued by referendum 
conducted in the same manner as the referendum adopting the tax under this section. 
A vote by a municipality to adopt or repeal a local option real estate transfer tax may 
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not be held more often than once each year. The municipality must notify the assessor 
and the county register of deeds within 30 days of the outcome of any election. 
§4686. Effective date of tax 
The local option real estate transfer tax authorized by this chapter takes effect 120 
days after the municipal referendum vote under section 4685 if it is accepted by a 
majority of the local voters voting at the election and the total number of votes cast equals 
or exceeds 20% of the total number of votes cast in that municipality in the most recent 
gubernatorial election. 
PARTB 
Sec. B-1. 36 MRSA §683, sub-§2, as enacted by PL 1997, c. 643, Pt. HHH, §3 
and as affected by § 10, is amended to read: 
2. Exemption in addition to other exemptions. The exemption provided in this 
subchapter is in addition to the exemptions provided in sections 653 and 654 and chapter 
907-B. 
Sec. B-2. 36 MRS A c. 907-B is enacted to read: 
CHAPTER 907-B 
LOCAL OPTION HOMESTEAD PROPERTY TAX EXEMPTION 
PROGRAM 
II 
§6241. Short title 
This chapter may be known and cited as "the Local Option Homestead Property Tax 
Exemption Program." 
§6242. Definitions 
IS 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Applicant. "Applicant" means an individual who has applied for a homestead 
property tax exemption pursuant to this chapter. 
2. Homestead. "Homestead" means any residential property, including cooperative 
property, in this State assessed as real property owned by an applicant or held in a 
revocable living trust for the benefit of the applicant and occupied by the applicant as the 
applicant's permanent residence or owned by a cooperative housing corporation and 
occupied as a permanent residence by a resident who is a qualitying shareholder. 
"Homestead" does not include any real property used solely for commercial purposes. 
§6243. Municipal authority 
The legislative body of a municipality may adopt by ordinance a program to provide 
a local option homestead property tax exemption to persons with a homestead in that 
municipality. 
1. Conditions of program. A program adopted under this section must have the 
same eligibility requirements as the homestead property tax exemption established in 
chapter 105, subchapter 4-B. 
2. Relationship to state program. Benefits received under a program adopted by a 
municipality under this chapter are in addition to benefits provided under the exemption 
in chapter 105, subchapter 4-B. 
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3. Effect on state valuation. The State Tax Assessor shall ensure that the valuation 
of property exempt under this chapter is included in state valuation. 
4. Denial; appeals. If a municipal assessor determines that a property is not eligible 
for a local option homestead property tax exemption under this chapter, the municipal 
assessor shall provide promptly a notice of denial, including the reasons for the denial, to 
the applicant either by personal delivery or regular mail. An applicant may appeal a 
denial of an exemption under this chapter using the procedures provided in chapter 105, 
subchapter 8. 
§6244. Repeal of program 
A municipality that has adopted a local option homestead property tax exemption 
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program under this chapter may repeal it through the same procedure by which the 
program was adopted. 
SUMMARY 
This bill does the following: 
Part A allows a municipality, by referendum, to establish a local option real estate 
transfer tax of up to 2% on the transfer of single family homes. The revenue must be 
used to fund: 
A local option circuitbreaker program; 
2. A local option homestead property tax exemption program; or 
3. The portion of the state homestead property tax exemption program that is not 
funded by the State; currently 50% of the property tax revenues lost as a result of the 
State homestead property tax exemption are not funded by the State. 
Part B allows a municipality to adopt a local option homestead property tax 
exemption program.