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Volume 1 - Opinions of Counsel SBEA No. 59

Opinions of Counsel index

Aged exemption (life tenant) (taxes paid by remainderman) - Real Property Tax Law, § 467:

Real property owned by a remainderman who has contracted to pay the real property taxes during the term of an otherwise qualified aged life tenant would be entitled to the aged exemption.

Our opinion has been requested as to whether the aged exemption should be granted on real property occupied by a life tenant where the remainderman has contracted to pay the real property taxes during the term of the life tenancy.

A person who has the use of real property for his life possesses a life estate in that property and may also be referred to as a life tenant. It is well settled law that the possessor of a life estate is an owner of the property and as such is entitled to full possession, use and enjoyment of the realty for the duration of his natural life (Ackerman v. State, 199 Misc. 76, 102 N.Y.S.2d 536; In re McCarty’s Estate, 158 Misc. 287, 285 N.Y.S. 641).

The law is also well settled that a life tenant of real property has a freehold estate and is considered the owner thereof for assessment and taxation purposes (Deraismes v. Deraismes, 72 N.Y. 154; In re Detmold’s Estate, 115 N.Y. 450, 22 N.E. 263; In re Kontir’s Estate, 101 N.Y.S.2d 879; Op.Atty.Gen. August 29, 1960; 1915, Op.Atty. Gen. 95). The court in the McCarty case stated (at page 643) that “[t]he obligation to pay taxes, interest, insurance premiums, and perform ordinary repairs is so wrapped up in life tenancy as to be, practically speaking, part of the estate itself; the life tenant really has no ‘property’ for his own absolute use and enjoyment until these obligations are discharged.” Thus a person who has a life estate would be considered the owner of the property within the meaning of section 467.

Accordingly, the possessor of a life estate or a life tenant being in possession and having the use and enjoyment of the property is deemed to be the owner thereof for all purposes, including taxation and, likewise, he may benefit from any applicable exemptions. The life tenant in possession who meets the qualifications of section 467 is within the class of persons intended to be benefitted, and it is our opinion that he be considered as title owner for purposes of this exemption as well as for other property tax purposes. The Attorney General has also stated that a holder of a life estate in real property is qualified to make application for certain exemptions from taxation under section 467 (see 1968, Op.Atty.Gen. 40).

An additional reason, we believe, is that the life tenant may be forced to exercise rights of redemption if the remainderman breaches his contract to pay the taxes, and in such case the costs to the life tenant should not be more than they would have been had the contract not existed. Thus the tax liability should be that which would ordinarily accrue against real property occupied by a life tenant, and the exemption should be applicable.

February 11, 1972