Eligible Funds Exemption - Overview
The Eligible Funds Exemption reduces the assessed value of a property that a veteran purchased with "eligible funds" (typically up to a maximum of $5,000) that the veteran received upon discharge from active duty.
- a veteran's pension
- bonus or insurance monies (or dividends or refunds on such insurance)
- compensation paid to prisoners of war
- mustering out pay
If the taxing jurisdiction offering the eligible funds exemption decides at a later date to adopt the alternative veteran's exemption, it can't grant any further eligible funds exemptions; in this situation, the jurisdiction will "grandfather" all eligible funds exemptions granted before that date
Municipalities have the option to offer the exemption for eligible veterans in cooperative apartments
Veterans who own the following are also eligible:
- vacant property
- property leased to others
Where the Eligible Funds Exemption is available, the following individuals are also eligible:
- all persons who rendered military or naval services to the United States at any time
- certain individuals who served in World War II in the U.S. Merchant Marine
- those who served in a civilian capacity during world War II, either in
- the American Field Service (overseas duty),
- as a flight crew and aviation ground support employee of Pan American Airlines contract with the Air Transport Command
Veterans who qualify for grants to purchase or to modify specially adapted houses to accommodate their serious disabilities, or the homes of their widowed spouses, may receive the exemption under Section 458(3); this benefit is available by completing Item 10 on form RP-458; if qualified, the veteran will receive a 100 percent exemption for all taxing purposes, including school district purposes
Use Form RP-458 Application for eligible funds exemption from real property taxation
Instructions are also available.
File the form with your municipal assessor.
Annual exemption renewal is not necessary, except in instances where veteran's service-connected disability rating changes.
Taxing jurisdictions have the option to increase the eligible funds exemption (beyond the $5,000 limit) as a result of a municipal-wide reassessment. This change is known as the "change in level of assessment". The assessor, in a participating jurisdiction, increases or decreases the exempt amount by the change in level of assessment factor.
- For example, if the reassessment results in overall assessments increasing by a factor of five, the eligible funds exempt value will also increase by that factor
If this adjustment in exempt value results in a more beneficial exemption to a veteran or qualified owner than what the owner has been receiving after switching from the Eligible Funds Exemption to the Alternative Veterans' Exemption, such an owner may then switch back to the Eligible Funds Exemption with conditions.
Jurisdictions allowing the change in level option must adopt an additional option to permit this switch back to the Eligible Funds Exemption; if such an option is available, the veteran must apply for the eligible Funds exemption within one year after the jurisdiction has adopted this option in its local laws.