"Buying a Home in Maine: When Does the Homestead Exemption Reach My Property Tax Bill?"

The keys to your new home in Maine are in your hand on a Friday in June. Over the weekend you find the homestead exemption application on the town's website, and on Monday you drop it off. Then the assessor's reply points you to one line on the form. You have to have owned a homestead in Maine for the twelve months ending April 1, and by then you will have ten.

Maine gives the homestead exemption to a permanent resident who has owned a homestead in Maine for the twelve months ending April 1. If you are arriving from another state, you meet that on the second April 1 after your closing, so your first full tax year is billed with no exemption on it. A client who already owns a home in Maine and is buying another one keeps that history, and owes the new town a fresh application by April 1.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, NMLS #483943, through C2 Financial Corporation, licensed in fifteen states, including Maine.

Maine runs this exemption through the town, and the assessor applies two tests: whether you own the home and live in it as your permanent residence, and how long you have owned a home anywhere in Maine. That second test is where a client arriving from another state spends a year waiting.

Who qualifies for the Maine homestead exemption?

A permanent resident of Maine who owns the home, lives in it, and has owned a homestead somewhere in Maine for the twelve months ending April 1.

36 M.R.S. §683 exempts part of the just value of "the homestead of a permanent resident of this State who has owned a homestead in this State for the preceding 12 months."

Just value is Maine's term for what the home is actually worth. Two conditions have to be true on the April 1 that the tax year is based on. You are a permanent resident of Maine living in the home, and you have owned a homestead in Maine for the twelve months before that date. The definitions in 36 M.R.S. §681 make a homestead the residential property in Maine that you own, or that a revocable living trust holds for you, and that you occupy as your permanent residence. A permanent residence is the one true, fixed home you intend to return to whenever you are away. Whether Maine is really that home is the assessor's call, and 36 M.R.S. §682 lets the assessor consider where you work, your previous permanent residence, your voter registration, driver's license, vehicle registration and income tax returns.

Maine also uses the word homestead for homestead protection on a Maine refinance, which is about a spouse's interest in the home and has nothing to do with your tax bill.

The twelve-month clock for a client moving from another state

The twelve months run on how long you have owned a home in Maine, and if you are arriving from another state, that clock starts the day you close.

36 M.R.S. §502 fixes the status of every property and every taxpayer as of April 1. So the exemption first reaches the tax year based on the first April 1 that comes a full twelve months after your closing, whether you closed in March or in November. Your first full tax year is billed without the exemption, and that is a cost we can plan around before you write an offer.

If you already own a home in Maine and you are buying another one

Then the twelve months you have already put in count, and what you owe the new town is an application.

The statute asks whether you have owned a homestead in Maine, and it does not ask whether you have owned this particular home. Maine Revenue Services' homestead application is built around that reading. You attest that you have owned a homestead in Maine for the twelve-month period ending April 1, and you give the address if you owned a homestead in another Maine municipality within the past twelve months. South Bristol's copy of the form adds that your ownership has to have been continuous across that twelve-month period.

So a client selling in Brunswick and buying in Scarborough keeps their history and files again at the new town office. The Town of Scarborough says it plainly: if you have recently moved or sold your property, you must reapply on your new home, even when you are moving within Scarborough. A gap between selling and buying is the one situation to raise with the assessor first, since the form asks for continuous ownership.

How much is the Maine homestead exemption?

The exemption is up to $25,000 of just value. Your town's certified ratio is its assessed value stated as a percentage of what homes are actually worth, and the $25,000 is multiplied by that ratio. So the same exemption is worth different amounts in neighboring towns.

Maine Revenue Services' homestead exemption FAQ puts the current amount at up to $25,000 of your home's value. That is the $10,000 in §683, subsection 1, plus the $15,000 the statute adds for tax years beginning on or after April 1, 2020. For tax years beginning on or after April 1, 2027, the exemption moves into a new section, 36 M.R.S. §683-A, and the amount there is still up to $25,000.

The FAQ walks through a town at 80%, where the exemption becomes $25,000 times 0.80, or $20,000, and the Town of Scarborough's homestead page shows the same arithmetic at 94%, which comes to $23,500. Your town's mill rate, the tax charged for every $1,000 of assessed value, then turns that reduction into dollars.

When is the Maine homestead exemption application due?

On or before April 1 of the year the taxes are based on, filed with the assessor in the town where the home is, and only once for as long as you own and occupy that home.

36 M.R.S. §684 says a person claiming the exemption for the first time files with the assessor on or before April 1 of the year on which the taxes are based. The state form adds that forms filed after April 1 of any year apply to the following year's assessment. The City of Caribou's packet for the 2027 tax year turns that into a date: in the assessor's office by April 1, 2027, to be eligible for the 2027 tax year.

Under the same section, unless the assessor determines the property is no longer entitled to it, you keep receiving the exemption without filing again. You do file again when you move, because the exemption is granted on a specific homestead.

Your escrow account in the first year

The tax line in your monthly payment should be built on a bill with no exemption on it, which is a different number from the one the seller was paying.

Most purchase loans collect property taxes monthly and hold them until the town bill comes due, and how an escrow account collects and pays your property taxes walks through the mechanism. That monthly figure gets estimated when the loan is set up, very often from the seller's last bill, and a Maine seller who lived there for years almost certainly had the exemption on it.

Two things can be different about your first bill. The homestead exemption is not on it in a relocation year, and any other exemption, a veteran's for example, is whatever you file for and qualify for. The town's assessed value on your first April 1 can also differ from the figure behind the seller's old bill, since Maine towns update values and revalue. If the town's bill is higher than what was collected, the company you send your payment to runs an escrow analysis and raises the payment. The valuation side is covered in how property taxes can change after you buy a home.

So please tell me you are relocating into Maine when we set up your estimate, and the tax line gets built on the home's expected assessed value with no homestead exemption applied. The Maine mortgage page covers the Maine transfer tax, which the statute splits between you and the seller. If this is your first home, how a MaineHousing loan takes the transfer tax off your closing belongs beside it.

The steps, in order

1. You'll want to run your numbers before you are attached to an address. You can see your numbers without an address in hand. If you are moving from another state, please say so, and the first-year tax estimate gets built with no exemption on it.
2. You'll want to count forward to the first April 1 that comes a full twelve months after your closing, because that is the tax year the exemption can first reach.
3. Please call the assessor in the town you are buying in for the certified ratio, the mill rate, and the way they want the application delivered. It also helps to have your driver's license and vehicle registration at the new address.
4. The application goes in on or before the April 1 on which you meet the twelve months. Filing earlier does not move that date, and a form filed before you qualify may need to be filed again, so please ask the assessor.

Common mistakes in the first year

Assuming the closing filed it. Your closing records the deed and settles the taxes between you and the seller. Nobody at that table files a homestead application.

Filing early and treating it as handled. The form has you attest to twelve months of Maine ownership ending April 1, and in your first year you cannot. The filing that counts is the one in by the April 1 on which you can.

Budgeting the purchase on the seller's tax number. That bill had the seller's homestead exemption on it, and in a relocation year yours will not, so it is lower than the bill you should plan around.

An example, with invented numbers

Numbers below are made up to show the mechanism. They are not a quote, a prediction, or a statement about any real Maine town.

Two clients close on homes with the same assessed value in the same Maine town in June. One is moving up from a home they have owned in the next town over for six years, and the other is relocating from Connecticut. Both sellers had the exemption on the bill, and both loans were set up collecting $340 a month for taxes.

The client moving within Maine files a new application with the town that winter, before April 1. Their twelve months of Maine ownership is long past, so the exemption is on the coming year's bill, and the bill comes in where the estimate put it. The escrow collection stays at $340.

The client relocating from Connecticut cannot attest to twelve months of Maine ownership on that April 1, so the exemption is not on the coming year's bill. The bill comes in about $360 higher than the year's estimate. The escrow analysis raises their monthly collection by $30, to $370, and spreads the $360 shortage across the next twelve months, another $30 a month. They file by the following April 1, and the exemption is on the year after.

Same town, same assessed value, same month of closing, and about $60 a month between the two escrow collections in the year after the analysis.

Where to start

See your numbers with no credit pull, no account, and nobody calling you. Then choose the option that works best for you.

Once you are ready to make an offer, get pre-approved for a Maine mortgage so your income, debts and credit are reviewed rather than estimated. If you served, the veterans property tax exemptions in Maine go to the same town office by the same April 1.

Nothing here is a loan approval, a denial, a commitment to lend, or legal or tax advice. The assessor in your town or your own tax adviser is the right person to ask about your own situation. No letter from anyone is a loan commitment, and final approval depends on the property, the appraisal and full underwriting.

Common questions

Can I get the Maine homestead exemption in my first year of owning a home in Maine?

Usually not if you are arriving from another state. 36 M.R.S. §683 gives the exemption to a permanent resident of Maine who has owned a homestead in Maine for the preceding twelve months, measured on the April 1 that the tax year is based on. If your Maine ownership began at closing, you have not met that on the next April 1. So the exemption first reaches the following tax year, and the application that counts is the one in by that April 1.

Does the twelve months have to be on the same home?

No. The statute asks whether you have owned a homestead in Maine, so an earlier Maine home counts toward the twelve months. Maine Revenue Services' application form asks for the address if you owned a homestead in another Maine municipality within the past twelve months, and says the ownership has to have been continuous for the twelve-month period ending April 1.

When is the Maine homestead exemption application due, and where do I send it?

On or before April 1 of the year the taxes are based on, to the assessor in the town where the home is. 36 M.R.S. §684 sets the date, and the state's form says an application filed after April 1 applies to the following year. Once granted on a home you continue to own and occupy, it stays without a new filing each year. You do file again when you move to a different home.

How much will the homestead exemption lower my Maine property tax bill?

That comes down to three numbers. The first is the exemption amount, a fixed amount of just value set by 36 M.R.S. §683 and carried into §683-A from April 1, 2027. The second is your town's certified ratio, which that amount is multiplied by. The third is the mill rate, the tax on each thousand dollars of assessed value, which turns the reduction into dollars. The current amount and worked examples are in the how-much section above.

Should my escrow account be set up with or without the homestead exemption?

Without it, if you are relocating into Maine. Your first full tax year is billed before you have owned a Maine homestead for twelve months, so an escrow estimate built on the seller's exempted bill will run short. Setting the tax line on the home's expected assessed value with no exemption applied means the payment you plan around matches the bill the town sends.