State benefit programs that help the elderly stay in their homes sometimes run into unexpected issues. Do the research before making any changes. You might unknowingly put more than the benefit at risk.
In New Jersey, 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.
However, what happens if a mother and daughter share ownership of the home, and only the mother is a senior? Is the mom’s portion of the ownership eligible for the Senior Freeze? Is it worth it to have the daughter’s name taken off of the deed? What happens when the mom dies, if the daughter’s name is no longer on the deed?
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.
If the mother and daughter decide to take the daughter off of the deed, so that the amount of the “Senior Freeze” is increased, the daughter is effectively giving up her ownership of the home. If the estate plan has been made with the dual ownership in mind, there may need to be a review and revision of the estate plan.
Before creating potential tax and ownership issues, figure out how much money will be saved by making this change. Another bit of advice: meet with an estate planning attorney who is familiar with your state’s laws and will be able to help you plan for any possible fallout from the change. They may run the numbers and discover that the change is not worth it, or it may be something worth doing that requires some tinkering with your estate plan. It’s not a do-it-yourself project: there’s too much at risk here.
Reference: nj.com (March 27, 2019) “I own a home with Mom. Can she qualify for the Senior Freeze?”
Holden & Campbell, LLC – Annapolis Estate Planning Attorneys