What happens if there’s no will? Homeownership and property taxes are two key issues to sort out if someone dies intestate (with no will) but has real property.
Q: Does a family member or friend have to start paying property taxes after the owner of the house (who was over 65) dies in order to keep the house? No will was processed, so it’s left to the next of kin. The owner of the property didn’t pay taxes because he or she was tax exempt. Until the name is changed on the deed, will property taxes need to be paid?
A: You’ve asked two different questions. The first question has to do with the ownership of the home and when it transfers and the other has to do with real estate taxes. We’ll start with real estate taxes.
There are times where getting older has its benefits. In some places, when you get to be of a certain age — generally 65 years old — you may receive a substantial reduction in your real estate taxes. In some locations, you have to apply yearly with the taxing authorities to get that real estate tax benefit conferred. That application may be as simple as filling out a card or letter, filling in your birth date, signing it and sending it in.
If you fail to sign and return the letter, the tax reduction or exemption is removed and the real estate tax amount due goes up. So, it may be that the name on title is not as important as having the person that is entitled to the benefit sign the proper documentation and send it in. While some taxing bodies will allow the real estate tax benefit to continue for the year in which the owner died, that benefit may not continue in future years.
So the critical thing for you to know are the requirements for the tax exemption or tax reduction where the home is located.
The second issue question you asked is about the ownership of the home. The sale or transfer of title to a home may trigger several real estate tax events. In some places, as soon as there is a transfer of ownership of a property, the taxing authorities may have the right to reevaluate the property for real estate tax purposes. That means that if the home’s tax valuation has been frozen or its value is artificially low due to the time the owner lived and occupied the home, the taxing body has the ability to bring the home’s value to its “fair” level now.
For your friend this may mean the loss of the exemption but may also mean that the real estate tax bill could rise dramatically. On the tax exemption side, it may not matter who owns the property if the person who received the benefit is deceased. If the owner can’t fill out the paperwork and send it in, the taxes may go up whether title is in that person’s name or a new owner’s name. And, if title is changed, not only do you have the loss of the tax exemption, but you may also have an increase in the real estate taxes due to the reevaluation of the property’s worth.
In any situation, once the tax bill is issued, that tax bill will have to be paid by your friend or whomever owns or will own the property. Your friend will have to investigate how tax exemptions work in his state and how tax reevaluations or reassessments work there as well. He will then know how much time he has before the exemption will expire and what will happen once title to the property changes hands.
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