Tax Information
Annual Income Test Filing Requirements
After you are on the deferral program you must meet an annual income test not to exceed $38,500 federal adjusted gross income. Each year, you must file an Oregon income tax return by April 15th to avoid being disqualified from the program.
Paying The Deferred Taxes
The deferred taxes (plus interest of 6 percent per year on the taxes deferred) have to be paid when any of the following occurs:
- The taxpayer receiving the deferral dies.
- You sell the property or in some other way change the ownership.
- You cease to live permanently on the property.
The deferred taxes plus interest must be paid to the Oregon Department of Revenue by August 15th after the calendar year when one of the above events occurs.
When heirs inherit the property and make it their principal residence by August 15th of the following year, a repayment schedule may be arranged with the Oregon Department of Revenue.
Other Payments
You or your spouse may pay all or part of your deferred taxes and still defer current and future taxes. You may reduce the amount of the deferred taxes by making payments to the Department of Revenue. These payments will first reduce the accrued interest and then will be applied to the deferred tax. Others (relatives or friends) also may make payments on your accounts for you if you don't object.
Income Tax Information
Property taxes, deferred under this program, may still be included with your itemized deductions on Federal Schedule A.
The county receives payment of your taxes from the state. The state, in turn, has a lien against your property for the amount of your property taxes. You are considered to have paid your taxes on time. You may claim a deduction for the discounted amount if you file Federal Schedule A. You can only claim an itemized deduction for the amount that was actually deferred that year.
In addition, the interest that accrues on your property taxes qualifies as home mortgage interest. You may deduct the interest on Federal Schedule A, in the year you actually pay it.
| Simple Interest Computation Interest Accumulation For 10 Years Based On $1,000 Deferred Taxes Each Year |
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| 10th year | $ 1,000 | 6% + 6% + 6% + 6% + 6% + 6% + 6% + 6% + 6% + 6% | = 60% | or | $ 600 |
| 9th year | 1,000 | 6% + 6% + 6% + 6% + 6% + 6% + 6% + 6% + 6% | = 54% | or | 540 |
| 8th year | 1,000 | 6% + 6% + 6% + 6% + 6% + 6% + 6% + 6% | = 48% | or | 480 |
| 7th year | 1,000 | 6% + 6% + 6% + 6% + 6% + 6% + 6% | = 42% | or | 420 |
| 6th year | 1,000 | 6% + 6% + 6% + 6% + 6% + 6% | = 36% | or | 360 |
| 5th year | 1,000 | 6% + 6% + 6% + 6% + 6% | = 30% | or | 300 |
| 4th year | 1,000 | 6% + 6% + 6% + 6% | = 24% | or | 240 |
| 3rd year | 1,000 | 6% + 6% + 6% | = 18% | or | 180 |
| 2nd year | 1,000 | 6% + 6% | = 12% | or | 120 |
| 1st year | 1,000 | 6% | = 6% | or | 60 |
| Total tax | $ 10,000 | Total interest for 10 years | $3,300 | ||
