“Does a person remain eligible for the Senior Freeze, if she conveys her house to her children, but keeps a life estate reservation on the property?”
Many states and counties have what is known as a “Senior Freeze” program. This program reimburses eligible senior citizens and disabled persons for property tax or mobile home park site fee increases on their principal residence. To qualify, a senior must meet all the eligibility requirements for each year from the base year through the application year.
As far as property with a life estate, nj.com’s recent article, “Will I get the Senior Freeze if I have a life estate for my home?” explains that it’s important to determine who remains the owner of the property. The article says that the Senior Freeze program is a bit of a misnomer, because the benefit doesn’t actually “freeze” property taxes. The program actually reimburses eligible individuals for any property tax increases incurred, once an individual qualifies for the benefit.
An eligible person gets the difference between the property tax amount in the first year of eligibility—the “base year”—and the current year’s property tax amount, presuming it is higher. For example, in New Jersey, a person has to have two consecutive years of eligibility before applying and satisfy the following requirements:
- The applicant or his/her spouse are at least 65 or receiving Social Security disability benefits;
- The applicant lived in the state continuously since Dec. 31, 2007, or earlier, as a homeowner or renter;
- The applicant owned and lived in his/her home since Dec. 14, 2014 or earlier (and still owns and lives in the home);
- He or she has paid the full amount of the property taxes due; and
- The applicant meets the income limit (currently $89,013 in NJ).
The program typically doesn’t apply to vacation homes, second homes, rental properties, or properties that have more than four units.
It’s not uncommon for seniors to transfer a home to a trust for a variety of purposes including government benefit planning but conveying your home entirely may disqualify you from the Senior Freeze program. An applicant is considered the owner of the property, if she retains a life estate in the property, which must be evidenced in the deed or other legal document showing the applicant’s right to occupy the property.
The retention of a life estate will let an applicant qualify for the program if the other eligibility qualifications are met, but it could create collateral issues that risk qualification for government benefits if the property is sold. Therefore, it’s critical that you talk to a certified elder law attorney before transferring real estate or making substantial gifts.
Reference: nj.com (December 11, 2019) “Will I get the Senior Freeze if I have a life estate for my home?”