Think of a situation where an adult child and her elderly mother own a home together and both live in it. What happens in New Jersey, if the child takes her name off of the deed? Will that allow her mother to eventually apply for and possibly receive a “Senior Freeze” for the property taxes? If the child’s name is kept on the deed, could she still qualify?
The New Jersey Division of Taxation explains that the Senior Freeze Program reimburses eligible senior citizens and disabled persons for property tax or mobile home park site fee increases on their principal residence. To qualify, an individual must meet all the eligibility requirements for each year, from the base year through the application year.
nj.com’s article asks and answers this question: “I own a home with Mom. Can she qualify for the Senior Freeze?” The article explains that a senior is eligible for participation if she’s over 65, has continuously lived in the state for the past ten years and has owned and occupied her current home for the past three years. The property tax due on her home also must be paid in full.
If a senior is seeking eligibility for the 2018 tax year, she must have met the eligibility requirements in both 2017 and 2018 and her annual income in each year can’t have been more than $87,268 and $89,013, respectively. Applications for the 2018 tax year must be filed by October 31, 2019.
Eligible seniors are reimbursed for the amount by which their current annual property tax amount is greater than the property tax amount in her first year of eligibility for the program.
Therefore, if the mom in the initial scenario satisfies the eligibility requirements for the program, the fact that she co-owns the home with her adult child won’t disqualify her from receiving a reimbursement. However, she’ll only be entitled to partial reimbursement of the tax increase, in proportion to her percentage of ownership in the home.
If the child conveys her interest in the home to her mother, making her the sole owner of the property, she’d be eligible for the full reimbursement amount for the first tax year that she is sole owner for the entire year. The Senior Freeze Program doesn’t pro-rate reimbursements for mid-year changes in ownership.
It’s important to remember that conveying the child’s interest in the home to her mother, could have unrelated legal and tax consequences that could outweigh the savings from the reimbursement. This situation would be best resolved by sitting down with a local estate planning attorney who is familiar with the laws of the state and the issues that might arise from changes in the ownership of the home.
Reference: nj.com (March 27, 2019) “I own a home with Mom. Can she qualify for the Senior Freeze?”