Dear Cape Elizabeth property owners:

If you are enrolled in the Homestead Exemption, Veteran Exemption, or both Exemptions, there will be a change on this year’s property tax bill. When this year’s property tax bills are received in August, you will notice that the exemption amounts for the Homestead Exemption and the Veteran Exemption have changed. For the 2005-2006 tax bill, the Homestead Exemption amount has changed from $13,000 to $12,700. Additionally, you will notice that the Veteran Exemption has changed from $5,000 to $4,900. Do not be alarmed, as this is not a mistake.

There are two reasons behind the adjustment to these exemption amounts. The first reason is to keep the town of Cape Elizabeth in compliance with state law. State law requires both exemptions be adjusted by the town’s Declared Assessment Ratio each year. The exemption is adjusted by multiplying the exemption amount by the town’s Assessment Ratio. The town’s Assessment Ratio is determined by examining the relationship between the sale prices of the properties in Cape Elizabeth, and their assessed values. The state examines these sales and their assessed values through their staff at Maine Revenue Services on an annual basis, and the town assessor examines these sales and their assessments on a monthly basis.

The second reason for adjusting the exemptions is because the state of Maine reimburses the town for granting these exemptions. However, the state only reimburses the town based on the ratio adjusted exemption amount. If the town grants an exemption in an amount greater than what the state reimburses, it would not receive an equal amount of total reimbursement, and a shortfall would result. Therefore, the town must adjust the exemption amounts to prevent such events from happening.

These are the reasons behind adjusting the exemptions, and not keeping the ratio at the inaccurate 100 percent of market value. Based on the sales reviewed by the Bureau of Revenue Services and the Assessor, the Declared Ratio for the town of Cape Elizabeth for the 2005-2006 assessment is 98 percent. For the past two years, the Declared Ratio has been 100 percent of market value. The robust real estate market and increasing sale prices have worked in concert to increase the difference between a property’s current market value and its assessed value.

It is important to remember that the Homestead Exemption will be identified specifically on your property tax bill, and will be in the amount of $12,700, not $13,000, and the Veteran Exemption will be in the amount of $4,900, and not $5,000.

Please feel free to contact the Assessor’s Office with any of your assessment related questions. For new property owners, and long-term property owners who currently do not have any of these exemptions applied to their property, contact either our office or Web site link at capeelizabeth.com to see if you qualify for either exemption.

Matthew E. Sturgis, CMA

Assessor

Town of Cape Elizabeth