An Act To Provide Housing Relief for Maine Families and Seniors
Maine Legislature, Session 129, LD 0669
Committee: Taxation
Sponsors: MORALES, BABBIDGE, GRAMLICH, RECKITT, TEPLER
Amends: 22 MRSA §4301, 36 MRSA §943-C, 36 MRSA §5219-K, 36 MRSA §5219-V

Legislative Document
No. 669
H.P. 490
House of Representatives, February 7, 2019
An Act To Provide Housing Relief for Maine Families and Seniors
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative MORALES of South Portland.
Cosponsored by Representatives: BABBIDGE of Kennebunk, GRAMLICH of Old Orchard 
Beach, RECKITT of South Portland, TEPLER of Topsham.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  22 MRSA §4301, sub-§7, as amended by PL 2013, c. 551, §1, is further 
amended to read:
7.  Income.  "Income" means any form of income in cash or in kind received by the 
household, including net remuneration for services performed, cash received on either 
secured or unsecured credit, any payments received as an annuity, retirement or disability 
benefits, veterans' pensions, workers' compensation, unemployment benefits, benefits 
under any state or federal categorical assistance program, supplemental security income, 
social security and any other payments from governmental sources, unless specifically 
prohibited by any law or regulation, court ordered support payments, income from 
pension or trust funds, household income from any other source, including relatives or 
unrelated household members and any benefit received pursuant to Title 36, chapter 907, 
Title 36, section 5219-II and, Title 36, section 5219-KK and Title 36, section 5219-VV, 
unless used for basic necessities as defined in section 4301, subsection 1.
The following items are not available within the meaning of this subsection and 
subsection 10: 
A.  Real or personal income-producing property, tools of trade, governmental 
entitlement specifically treated as exempt assets by state or federal law;
B.  Actual work-related expenses, whether itemized or by standard deduction, such as 
taxes, retirement fund contributions, union dues, transportation costs to and from 
work, special equipment costs and child care expenses; or
C.  Earned income of children below the age of 18 years who are full-time students 
and who are not working full time.
In determining need, the period of time used as a basis for the calculation is the 30-day 
period commencing on the date of the application.  This prospective calculation does not 
disqualify an applicant who has exhausted income to purchase basic necessities if that 
income does not exceed the income standards established by the municipality.  
Notwithstanding this prospective calculation, if any applicant or recipient receives a lump 
sum payment prior or subsequent to applying for assistance, that payment must be 
prorated over future months.  The period of proration is determined by disregarding any 
portion of the lump sum payment that the applicant or recipient has spent to purchase 
basic necessities, including but not limited to:  all basic necessities provided by general 
assistance; reasonable payment of funeral or burial expenses for a family member; 
reasonable travel costs related to the illness or death of a family member; repair or 
replacement of essentials lost due to fire, flood or other natural disaster; repair or 
purchase of a motor vehicle essential for employment, education, training or other day-to-
day living necessities; repayments of loans or credit, the proceeds of which can be 
verified as having been spent on basic necessities; and payment of bills earmarked for the 
purpose for which the lump sum is paid.  All income received by the household between 
the receipt of the lump sum payment and the application for assistance is added to the 
remainder of the lump sum.  The period of proration is then determined by dividing the 
remainder of the lump sum payment by the verified actual monthly amounts for all of the 
household's basic necessities.  That dividend represents the period of proration 
determined by the administrator to commence on the date of receipt of the lump sum 
payment.  The prorated sum for each month must be considered available to the 
household for 12 months from the date of application or during the period of proration, 
whichever is less.
Sec. 2.  36 MRSA §943-C, sub-§1, ¶B, as enacted by PL 2017, c. 478, §3, is 
amended to read:
B.  The former owner or owners of the property demonstrate to the municipal officers 
or their designee that:
(1)  The income, as defined in section 5219-KK, subsection 1, paragraph D or 
section 5219-VV, subsection 1, paragraph D, of the former owner or owners of 
the property was less than $40,000, after medical expenses have been deducted, 
for the calendar year immediately preceding the calendar year in which the right 
of redemption expired; and
(2)  The value of liquid assets of the former owner or owners of the property is 
less than $50,000 in the case of a single individual or $75,000 in the case of 2 or 
more individuals.  For the purposes of this paragraph, "liquid assets" means 
something of value available to an individual that can be converted to cash in 3 
months or less and includes bank accounts, certificates of deposit, money market 
or mutual funds, life insurance policies, stocks and bonds, lump-sum payments 
and inheritances and funds from a home equity conversion mortgage that are in 
the individual's possession whether they are in cash or have been converted to 
another form.
The former owner or owners must provide documentation verifying the former 
owner's or owners' income and liquid assets.
Sec. 3.  36 MRSA §5219-KK, as amended by PL 2017, c. 474, Pt. B, §§12 to 16, 
is further amended to read:
§5219-KK.  Property tax fairness credit for tax years beginning on or after January 
1, 2014 and before January 1, 2020
For tax years beginning on or after January 1, 2014 and before January 1, 2020, a 
Maine resident individual is allowed a property tax fairness credit as computed under this 
section against the taxes imposed under this Part.
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.   For tax years beginning before January 1, 2018, "benefit base" means property 
taxes paid by a resident individual during the tax year on the resident individual's 
homestead in this State or rent constituting property taxes paid by the resident 
individual during the tax year on a homestead in the State not exceeding the 
following amounts:
(1)  For persons filing as single individuals, $2,000;
(2)  For persons filing joint returns or as heads of households that claim no more 
than 2 personal exemptions, $2,600; and
(3)  For persons filing joint returns or as heads of households that claim 3 or more 
personal exemptions, $3,200.
A-1.  For tax years beginning on or after January 1, 2018, "benefit base" means 
property taxes paid by a resident individual during the tax year on the resident 
individual's homestead in this State or rent constituting property taxes paid by the 
resident individual during the tax year on a homestead in the State not exceeding the 
following amounts:
(1)  For persons filing as single individuals, $2,050;
(2)  For persons filing as heads of households that can claim the federal child tax 
credit pursuant to the Code, Section 24 for no more than one qualifying child or 
dependent or for persons filing joint returns, $2,650; and
(3)  For persons filing as heads of households that can claim the federal child tax 
credit pursuant to the Code, Section 24 for more than one qualifying child or 
dependent or for persons filing joint returns that can claim the federal child tax 
credit pursuant to the Code, Section 24 for at least one qualifying child or 
dependent, $3,250.
B.  "Dwelling" means an individual house or apartment, duplex unit, cooperative unit, 
condominium unit, mobile home or mobile home pad.
C.  "Homestead" means the dwelling owned or rented by a taxpayer or held in a 
revocable living trust for the benefit of the taxpayer and occupied by the taxpayer and 
the taxpayer's dependents as a home and may consist of a part of a multidwelling or 
multipurpose building and a part of the land, up to 10 acres, upon which it is built.  
For purposes of this paragraph, "owned" includes a vendee in possession under a land 
contract, one or more joint tenants or tenants in common and possession under a 
legally binding agreement that allows the owner of the dwelling to transfer the 
property but continue to occupy the dwelling as a home until some future event stated 
in the agreement.
D.  "Income" means federal adjusted gross income increased by the following 
amounts:
(1)  Trade or business losses; capital losses; any net loss resulting from 
combining the income or loss from rental real estate and royalties, the income or 
loss from partnerships and S corporations, the income or loss from estates and 
trusts, the income or loss from real estate mortgage investment conduits and the 
net farm rental income or loss; any loss associated with the sale of business 
property; and farm losses included in federal adjusted gross income;
(2)  Interest received to the extent not included in federal adjusted gross income;
(3)  Payments received under the federal Social Security Act and railroad 
retirement benefits to the extent not included in federal adjusted gross income; 
and
(4)  The following amounts deducted in arriving at federal adjusted gross income:
(a)  Educator expenses pursuant to the Code, Section 62(a)(2)(D);
(b)  Certain business expenses of performing artists pursuant to the Code, 
Section 62(a)(2)(B);
(c)  Certain business expenses of government officials pursuant to the Code, 
Section 62(a)(2)(C);
(d)  Certain business expenses of reservists pursuant to the Code, Section 
62(a)(2)(E);
(e)  Health savings account deductions pursuant to the Code, Section 
62(a)(16) and Section 62(a)(19);
(f)  Moving expenses pursuant to the Code, Section 62(a)(15);
(g)  The deductible part of self-employment tax pursuant to the Code, Section 
164(f);
(h)  The deduction for self-employed SEP, SIMPLE and qualified plans 
pursuant to the Code, Section 62(a)(6);
(i)  The self-employed health insurance deduction pursuant to the Code, 
Section 162(l);
(j)  The penalty for early withdrawal of savings pursuant to the Code, Section 
62(a)(9);
(k)  Alimony paid pursuant to the Code, Section 62(a)(10);
(l)  The IRA deduction pursuant to the Code, Section 62(a)(7);
(m)  The student loan interest deduction pursuant to the Code, Section 
62(a)(17); and
(n)  The tuition and fees deduction pursuant to the Code, Section 62(a)(18).
E.  "Rent constituting property taxes" means 15% of the gross rent actually paid in 
cash or its equivalent during the tax year solely for the right of occupancy of a 
homestead in the State.  For the purposes of this paragraph, "gross rent" means rent 
paid at arm's length solely for the right of occupancy of a homestead, exclusive of 
charges for any utilities, services, furniture, furnishings or personal property 
appliances furnished by the landlord as part of the rental agreement, whether or not 
expressly set out in the rental agreement. If the landlord and tenant have not dealt 
with each other at arm's length, and the assessor is satisfied that the gross rent 
charged was excessive, the assessor may adjust the gross rent to a reasonable amount 
for purposes of this section.
2.  Credit prior to 2018.   For tax years beginning before January 1, 2018, a resident 
individual is allowed a credit against the taxes imposed under this Part in an amount 
equal to 50% of the amount by which the benefit base for the resident individual exceeds 
6% of the resident individual's income.  The credit may not exceed $600 for resident 
individuals under 65 years of age as of the last day of the taxable year or $900 for 
resident individuals 65 years of age and older as of the last day of the taxable year. In the 
case of married individuals filing a joint return, only one spouse is required to be 65 years 
of age or older to qualify for the $900 credit limitation.  Married taxpayers filing separate 
returns do not qualify for the credit under this section.
2-A.  Credit in 2018 and after.  For tax years beginning on or after January 1, 2018, 
a resident individual is allowed a credit against the taxes imposed under this Part equal to 
the amount by which the benefit base for the resident individual exceeds 6% of the 
resident individual's income. The credit may not exceed $750 for resident individuals 
under 65 years of age as of the last day of the taxable year or $1,200 for resident 
individuals 65 years of age and older as of the last day of the taxable year. In the case of 
married individuals filing a joint return, only one spouse is required to be 65 years of age 
or older to qualify for the $1,200 credit limitation. Married taxpayers filing separate 
returns do not qualify for the credit under this section.
3.  Refundability of credit.  The tax credit under this section is refundable after the 
application of nonrefundable credits.
Sec. 4.  36 MRSA §5219-VV is enacted to read:
§5219-VV.  Housing relief credit
For tax years beginning on or after January 1, 2020, a Maine resident individual is 
allowed a housing relief credit as computed under this section against the taxes imposed 
under this Part.
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Area median income" means the amount identified by the federal Department of 
Housing and Urban Development as the area median income by county or city for the 
place of residence of a resident individual claiming the credit under this section.
B.  "Dwelling" means an individual house or apartment, duplex unit, cooperative unit, 
condominium unit, mobile home or mobile home pad.
C.  "Homestead" means the dwelling owned or rented by a taxpayer or held in a 
revocable living trust for the benefit of the taxpayer and occupied by the taxpayer and 
the taxpayer's dependents as a primary residence and may consist of a part of a 
multidwelling or multipurpose building and a part of the land, up to 10 acres, upon 
which it is built.  For purposes of this paragraph, "owned" includes a vendee in 
possession under a land contract, one or more joint tenants or tenants in common and 
possession under a legally binding agreement that allows the owner of the dwelling to 
transfer the property but continue to occupy the dwelling as a home until some future 
event stated in the agreement.
D.  "Income" means federal adjusted gross income increased by the following 
amounts:
(1)  Trade or business losses; capital losses; any net loss resulting from 
combining the income or loss from rental real estate and royalties, the income or 
loss from partnerships and S corporations, the income or loss from estates and 
trusts, the income or loss from real estate mortgage investment conduits and the 
net farm rental income or loss; any loss associated with the sale of business 
property; and farm losses included in federal adjusted gross income;
(2)  Interest received to the extent not included in federal adjusted gross income;
(3)  Payments received under the federal Social Security Act and railroad 
retirement benefits to the extent not included in federal adjusted gross income; 
and
(4)  The following amounts deducted in arriving at federal adjusted gross income:
(a)  Educator expenses pursuant to the Code, Section 62(a)(2)(D);
(b)  Certain business expenses of performing artists pursuant to the Code, 
Section 62(a)(2)(B);
(c)  Certain business expenses of government officials pursuant to the Code, 
Section 62(a)(2)(C);
(d)  Certain business expenses of reservists pursuant to the Code, Section 
62(a)(2)(E);
(e)  Health savings account deductions pursuant to the Code, Section 
62(a)(16) and Section 62(a)(19);
(f)  Moving expenses pursuant to the Code, Section 62(a)(15);
(g)  The deductible part of self-employment tax pursuant to the Code, Section 
164(f);
(h)  The deduction for self-employed SEP, SIMPLE and qualified plans 
pursuant to the Code, Section 62(a)(6);
(i)  The self-employed health insurance deduction pursuant to the Code, 
Section 162(l);
(j)  The penalty for early withdrawal of savings pursuant to the Code, Section 
62(a)(9);
(k)  Alimony paid pursuant to the Code, Section 62(a)(10);
(l)  The IRA deduction pursuant to the Code, Section 62(a)(7);
(m)  The student loan interest deduction pursuant to the Code, Section 
62(a)(17); and
(n)  The tuition and fees deduction pursuant to the Code, Section 62(a)(18).
E.  "Housing cost" means the following payments made for the purpose of 
maintaining a homestead:
(1)  Property tax payments;
(2)  Property insurance payments;
(3)  Mortgage payments;
(4)  Rent payments; and  
(5)  Payments for heat, electricity, water and sewer, including well maintenance 
and septic maintenance.
2.  Credit.  For tax years beginning on or after January 1, 2020, a resident individual 
whose income is less than or equal to the area median income for the city and county of 
residence is allowed a credit against the taxes imposed under this Part in an amount equal 
to the amount by which the resident individual's housing cost for the tax year exceeds 
25% of the resident individual's income for the tax year.  The credit may not exceed 
$3,000 for resident individuals under 70 years of age as of the last day of the taxable year 
or $4,000 for resident individuals 70 years of age and older as of the last day of the 
taxable year. In the case of married individuals filing a joint return, only one spouse is 
required to be 70 years of age or older to qualify for the $4,000 credit limitation.  In the 
case of married taxpayers filing separate returns, each of whom claim the credit on the 
same homestead, the credit for each spouse may not exceed $1,500 if, for the taxable 
year, neither spouse was a resident individual 70 years of age or older or $2,000 if, for the 
taxable year, at least one spouse was 70 years of age or older.
3.  Refundability of credit.  The tax credit under this section is refundable after the 
application of nonrefundable credits.
SUMMARY
This bill replaces the property tax fairness credit with a housing relief credit for tax 
years beginning on or after January 1, 2020.  Resident individuals are eligible for the 
housing relief credit if their income is equal to or less than the area median income 
identified by the federal Department of Housing and Urban Development.  The credit is 
equal to the amount by which a resident individual's housing cost exceeds 25% of the 
individual's income.  Housing cost includes payments made for the purpose of 
maintaining a homestead, including property tax payments, property insurance payments, 
mortgage payments, rent payments and payments for heat, electricity, water and sewer, 
including well and septic maintenance.  The maximum credit is $3,000 for resident 
individuals under 70 years of age as of the last day of the taxable year or $4,000 for 
resident individuals 70 years of age and older as of the last day of the taxable year.