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An Act To Provide Housing Relief for Maine Families and Seniors
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.