Volume 1 - Opinions of Counsel SBEA No. 2
Aged exemption (income requirement) (insurance proceeds) - Real Property Tax Law, § 467:
Gifts and inheritances are excluded in computing income for purposes of the aged exemption. Since the proceeds of an insurance policy are in the nature of an inheritance, such proceeds, where they are made in one lump sum, are not to be computed as income for the purposes of the exemption.
Where the proceeds are received on a deferred plan, and a part of the deferred payment constitutes interest on the principal retained by the insurance company, such interest is income and must be computed as such if received within the calendar year prior to application for this exemption.
Pursuant to the provisions of subdivision 3(a) of section 467 of the Real Property Tax Law, gifts and inheritances are excluded from consideration in computing income for purposes of the exemption authorized by that statute.
Since the proceeds of an insurance policy are in the nature of an inheritance, such proceeds are not computed as income for purposes of this exemption statute. That determination is based on the premise that such payments are made in one lump sum.
Where a beneficiary receives insurance policy proceeds on a deferred plan, that portion of the deferred payment which constitutes principal would not be income for purposes of this exemption since it merely represents part of the lump sum payment received at a later date. However, that part of the deferred payment which constitutes interest on the principal retained by the insurance company constitutes income, and must be computed as such if received within the calendar year prior to application for this exemption. Usually, insurance companies supply the recipients of such payments with year end statements showing the amount of interest paid for income tax purposes, so the information should be readily available when application for exemption is made.
May 6, 1970
