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Volume 1 - Opinions of Counsel SBEA No. 48

Opinions of Counsel index

Aged exemption (income requirement) (insurance proceeds) - Real Property Tax Law, § 467:

A monthly death benefit received by an aged father as beneficiary of his deceased son’s national service life insurance is in the nature of a gift and does not constitute income for purposes of the aged exemption. However, if any portion of the monthly payment constitutes interest on the principle, such interest would constitute income and must be computed as such if received within the owner’s income tax year immediately preceding the date of application for this exemption.

Our opinion has been requested as to whether a monthly death benefit received by the father of a deceased veteran as beneficiary of his deceased son’s national service life insurance policy, constitutes income for purposes of section 467 of the Real Property Tax Law. Said section authorizes a partial exemption for the owner-occupied legal residence of certain aged persons.

Pursuant to the provisions of subdivision 3 of section 467 of the Real Property Tax Law, gifts and inheritances are excluded from consideration in computing income for purposes of this exemption and, in our opinion, the proceeds of an insurance policy are in the nature of a gift and such proceeds do not constitute income for purposes of this statute.

However, if any portion of the monthly payment constitutes interest on the principle retained by the government or the insurance carrier, such interest would constitute income and must be computed as such if received within the owner’s income tax year immediately preceding the date of application. If any portion of such monthly payment constitutes interest, the recipient would receive a statement to that effect and this information should be readily available when application is made for the exemption.

January 18, 1972

Updated: