Charles Jones Blog

Do you ever feel like you've been someplace before?  Back in 2011, I blogged about New Jersey’s Homestead Rebate Program because the form of rebate payment was changing from a paper check or direct deposit to a credit on the homeowner’s tax bill.  The criterion for receiving a Homestead credit is based on income qualifications of the individual owner(s), but the rebate at that time began to be distributed to the property, not the owner(s).  In essence, the rebate stayed with the property, not with the homeowner who paid the taxes. I discussed a “blind spot” for home sales and closings occurring between November and April of the following year.  Rebate applicants who sold their homes during the ”blind spot” and who received a tax credit based on income most likely lost out on their rebate back then, unless their settlement agent escrowed funds to cover the tax credit.

Here we are in 2015, and I am again blogging about a similar situation.  New Jersey 2012 Homestead Rebates will be awarded and applied to property tax bills in May of 2015. This event is unusual in that no Homestead Rebates were awarded in 2014, and there’s been a three year lag in 2012 rebates being issued.

What does this mean? Homestead rebate applicants who sold their homes since 2013 may not receive a tax credit or rebate based on 2012 taxes that they paid. In most cases, it is likely that the current owner will receive the rebate applied as a property tax credit in May 2015.

Home sellers may receive the rebate if they were able to indicate via their rebate application that they no longer own the property. According to the Department of the Treasury’s web site, indicating such means that a check or direct deposit can be issued to the former owner.1 However, it’s possible that former owners did not even receive the application since applications are usually mailed to the property address, not to the new address of the former owner.

In addition, former owners may receive the rebate if their settlement agent escrowed funds for the pending tax credit.  Otherwise, the tax credit will be applied to the tax bill of the current owner of the property in May 2015.

This is sure to cause confusion, phone calls and questions.  Affected home sellers may elect to call their real estate agent, attorney or title company asking about the rebate and escrowed funds. “Where’s my rebate?” may be a question you will hear. Unless the funds were escrowed or the current homeowner is willing to reimburse the former homeowner, it appears that the former owner could be out of luck. If you hear from a client/homeowner asking about the tax credit, what will you tell them? What do you think about the situation?



The information provided is for informative purposes only and is not intended to be legal advice or a legal opinion.  For legal advice, please consult an attorney.

Fred Burnett

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