Some states creating two-tier taxes, charging seasonal residents more than year-round ones

Some states with large populations of seasonal residents are imposing higher taxes for snowbirds and vacation rentals, as opposed to year-round residents, often pitting part-time residents against full-time ones, Elaine Povich reports for Stateline. David Brunori, deputy publisher at Tax Analysts, which examines state tax law and policy, told Povich, “One of the great ways of exporting the tax base is to tax people from out of state who rent property, own property or work in the state. It’s a political nirvana. They don’t vote.” (Getty Images: Provincetown, Mass.)

Several states "have a 'homestead exemption,' which lowers the property tax bills for certain categories of homeowners, usually full-time residents," Povich writes. "Some of the exemptions are income-based, while others apply to categories of homeowners such as widows or widowers and military families. In general, the exemptions do not apply to second homes of any kind, particularly vacation homes. Homestead exemptions are one way to protect local homeowners while taxing vacationers at the full market value. The other way is to increase taxes on vacation homes directly."

There are about 3.6 million vacation homes in the U.S., making up 3.1 percent of all housing units, says the 2000 U.S. Census, the most recent year for such data, Povich writes. Maine has the highest percent of vacation homes at 15.6 percent, followed by Vermont at 14.6 percent. But some towns, like Provincetown, Mass., explode with seasonal residents, with the population of Provincetown increasing from 3,000 in the winter to 30,000 during the summer.

Tom Donegan, chairman of the Provincetown Board of Selectmen, argues that higher taxes for part-time residents are justified because the town has to prepare for 30,000 residents by increasing its costs for emergency services and utilities, Povich writes. He told Povich, “It’s not about charging them more; it’s about finding ways to stabilize the population so we can keep people in their homes. (Year-round residents) are retired men and women and working men and women. Their homes are increasing in value, and they have to pay increased property taxes, usually on a small or fixed income.”

Not surprisingly, seasonal residents have complained about higher taxes, with the Cape Cod town of Mashpee rejecting such an idea earlier this year, Povich writes. "Joyce Mason, town manager for Mashpee, said it was 'pretty clear folks were not in favor of splitting the community.'" (Read more)