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Volume 10 - Opinions of Counsel SBRPS No. 10

Opinions of Counsel index

Veterans exemption (eligible funds) (voluntary separation incentive program) - Real Property Tax Law, § 458; 10 U.S.C., § 1174a:

Moneys paid to a veteran pursuant to the Voluntary Separation Incentive Program (10 U.S.C. §1174a) constitute eligible funds for purposes of section 458 of the Real Property Tax Law.

Our opinion has been requested concerning the “eligible funds” veterans exemption (Real Property Tax Law, §458). A veteran was honorably discharged from the United States Army and, upon discharge, received over $54,000 from the Department of Defense pursuant to the Voluntary Separation Incentive Program (VSIP), which is authorized pursuant to 10 U.S.C., section 1174a. The question is whether the VSIP funds received by the veteran constitute eligible funds for purposes of RPTL, section 458.

To receive the eligible funds veterans exemption, a parcel must satisfy three criteria: (1) title to the property must be in the name of a person eligible to receive the exemption (e.g., the veteran or spouse of the veteran); (2) pension, bonus or insurance moneys, referred to as “eligible funds,” must have been paid on account of the veteran’s service; and (3) these eligible funds must have been used to “purchase” the property.

10 U.S.C., section 1174a, provides that each military department shall establish a program, pursuant to which a member of a military department may request to be discharged or released, if the member has served on active duty or full time National Guard duty or a combination of active and full time National Guard duty for more than six years before December 5, 1991. If this request is approved by the applicable military department secretary, the applicant is, upon discharge, entitled to receive separation pay equal to “15 percent of the product of (i) the member’s years of active service, and (ii) 12 times the monthly basic pay to which the member is entitled at the time of his discharge or release from active duty...” (10 USCS §1174a(b)(2)(A)).

In our opinion, the monies paid pursuant to this program were paid in recognition of the veteran’s past contribution to the military, and were intended as a means of easing the officer’s transition to civilian life. The Attorney General has concluded that a readjustment allowance constitutes eligible funds (1957, Op.Atty.Gen. 173), and we are in agreement with this opinion (1 Op.Counsel SBEA No. 66).

Therefore, assuming that the monies the veteran in question received were paid pursuant to 10 U.S.C., section 1174a, it is our opinion that they do constitute eligible funds for purposes of RPTL, section 458, and, if the applicant can prove that he or she purchased real property with such monies, he or she would be entitled to an exemption pursuant to that section.

June 17, 1993

Updated: