26 Apr Is it too late to get the Homestead Rebate after I sell?

Q. If the buyer of a home receives the benefit of a Homestead Rebate that was intended for the prior owner, are they obligated to reimburse or return it? In one case, we just heard that a rebate owed from 2017 was applied to the house in 2021. The seller refuses to adjust, but I am thinking that he may be obligated by law to do so.
— Is it too late?

A. You may be out of luck.

Although it seems unfair, rebate credits that are applied to property taxes are not transferred due to a change in the home’s owner.

There is no law obliging the new owner to reimburse the seller, said Lisa McKnight, a certified financial planner with Peapack Private Wealth Management in New Providence.

She said if you owned a house in New Jersey and lived in it as your primary residence in 2017, the deadline for that filing was Oct. 1, 2019.

There is generally a lag in paying the rebates, but last year it was exacerbated by COVID-19,” McKnight said. The New Jersey Division of Taxation has announced that 2017 Homestead Benefit payments will be eligible to taxpayers beginning May 2021.

However, she said, due to changes in the program a few years back, you may have been able to capture the credit.

When completing the Homestead Rebate application, there are very specific instructions on Page 2 regarding the sale of the property. It reads:

• If the house is sold before filing the application, answer NO to question 9, “Do you still own your home?” Even if you are thinking of selling your home in the next couple of years you should answer NO. This way the state will send you a check instead of issuing a credit on the property taxes.
• If the house is sold after filing, you will need to be proactive to get your credit returned. You can call the state and request they change the credit to a check, or you will need to take the amount of the benefit into consideration at the settlement or closing.

So the benefit stays with the property, not the owner, McKnight said.

“The Homestead Benefit will reduce the tax bill of the person who owns the property on the date the benefit is paid,” she said. “This means that if you indicated you still own the home when filing your application, and later sell it, the only way to receive your 2017 Homestead Benefit is to take credit for the benefit at the closing of your property sale.”

She recommends you discuss this with your attorney or closing agent so they can negotiate on your behalf. It will be up to you to make sure the credit is included at the home closing, she said.

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This story was originally published on April 26, 2021.

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