Volume 4 - Opinions of Counsel SBEA No. 57
Aged exemption (ownership requirement) (remainderman) - Real Property Tax Law, § 467:
Since the holder of a life estate is deemed the owner of real property for purposes of taxation, and the remainderman has only a future interest in the property, which will ripen into ownership only on the death of the life tenant, the length of ownership requirement of section 467 of the Real Property Tax Law begins to run anew for the remainderman at the time he becomes owner of the property.
We have received an inquiry concerning the length of ownership requirement of the so-called aged exemption (Real Property Tax Law, § 467). The facts are that in 1965 a woman conveyed a remainder interest in her property to her daughter while reserving a life estate to herself. The mother died on May 24, 1973. The daughter became sole owner and resides on the property and appears to be otherwise qualified for the aged exemption. The question is whether she meets the length of ownership requirement of that statute.
Paragraph (b) of subdivision 3 of section 467 presently provides that no exemption shall be granted “unless the title of the property shall have been vested in the owner or all of the owners of the property for at least sixty consecutive months prior to the date of making application for exemption . . .”. (However, pursuant to Chapter 1004 of the Laws of 1974, effective January 1, 1975, this length of ownership requirement will be reduced to 24 months.)
The obvious intent for the length of ownership requirement was to prevent transfers of real property made solely to benefit from this exemption statute (e.g., disposing of a residence in a locality which has not granted the exemption and acquiring a residence in a locality which does; transferring title to an aged parent or near relative; removing the name of an under-age offspring from the deed).
However, several so-called hardship situations were recognized and several amendments were enacted. In 1967 subdivision 3 (b) was amended (L.1967, c.752) to provide that where title to the property was in the name of a deceased husband or wife and the surviving spouse succeeds to title by will or operation of law, the period of ownership of the deceased spouse shall be counted for purposes of the five year ownership requirement. In 1969 paragraph (b) was further amended (L.1969, c.1146) to provide that if property otherwise eligible for exemption is appropriated for a public purpose and the applicant acquires a replacement residence, the period of ownership of the replacement residence is to be combined with that of the prior residence. In 1971 a further amendment (L.1971, c.800) permitted the combining of the time of ownership by one spouse, where all or part of the title is transferred to the other spouse, with the time of such new ownership; and another (L.1971, c.954) permitted the combining of the time of ownership of property recently acquired with property formerly owned in the same assessing unit.
We have concluded (for reasons indicated below) that the length of ownership of a remainderman does not begin to run, for purposes of section 467, until he becomes sole owner of the property upon the death of the life tenant. Our conclusion is based in part on the fact that the Legislature has recognized the aforementioned exceptions to the length of ownership requirement and the situation described above (i.e., a remainderman becoming sole owner upon the death of the life tenant and combining the life tenant’s length of ownership. with his own) is not among them. Had the Legislature intended to create such an exception they could have done so by specific legislation as they did in the instances previously discussed.
We have previously stated that a life tenant should be considered the title owner for purposes of determining eligibility for this exemption (1 Op.Counsel SBEA Nos. 34 and 59); these opinions are in keeping with a series of judicial determinations that a life tenant is. deemed the owner of the property so held by him for taxation purposes.
One such judicial decision is found in the case of In re McCarty’s Estate, 158 Misc. 287, 285 N.Y.S. 641. There the court stated (at p. 642):
It is familiar law that during his life the life tenant is the exclusive owner of the land so held by him, with the exclusive right to its possession, control, and enjoyment, subject only to certain well-defined limitations or duties; the owner of the reversion or remainder in fee has no present right of enjoyment, no tangible and physical ownership of the land, but has a future incorporeal interest or estate in the land which will ripen into ownership of the land itself on the death of the life tenant. By statute it is provided that a life estate shall continue to be termed an estate freehold. Real Property Law, § 33. (emphasis supplied)
If for taxation purposes, the holder of a life estate is said to be the “exclusive owner”, and the remainderman has no more than a “future incorporeal interest” in the property, which will only ripen into ownership upon the death of the life tenant, then it necessarily follows that the length of ownership requirement of section 467 begins to run anew for the remainderman at the time he becomes sole owner (i.e., at the death of the life tenant). To hold otherwise would mean that the remainderman was also an “owner” during the term of the life tenant, and where there is more than one owner of the property, all the owners must meet the statutory requirements (with certain limited exceptions where the owners are a husband and wife). However, such an interpretation would appear to be contrary to the apparent legislative intent in enacting section 467 (viz., to benefit those aged individuals owning property, whether in fee or as a life estate, who have the actual burden of paying the taxes on such property); and it would certainly be an interpretation directly contrary to cases such as In re McCarty’s Estate, supra.
Therefore, it is our opinion that the daughter in the above factual situation does not presently meet the length of ownership requirement of section 467. While she was a remainderman, she was not an “owner” as that term is understood for taxation purposes. Therefore, it was only at the death of her mother that her time as an “owner” began to run for purposes of meeting the length of ownership requirement of this statute.
November 19, 1974
