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Volume 10 - Opinions of Counsel SBRPS No. 24

Opinions of Counsel index

Residential improvements exemption (generally) (completion) - Real Property Tax Law, § 421-f:

Improvements to one- and two-family residences must be completed before they may qualify for the residential improvements exemption.

We have received an inquiry concerning the law authorizing local governments to grant partial real property tax exemptions for improvements to one- and two-family residences (Real Property Tax Law, §421-f; added L.1993, c.704). The question is whether a certificate of occupancy must be issued before the exemption may be granted. The writer notes that some improvements may be near completion by taxable status date, so that a partial assessment on the improved property may exceed the assessed value of the parcel on the preceding year’s roll. {1}  He suggests that some property owners, who have anticipated receiving an exemption immediately, may object to an increased assessment while their qualifying improvements are as yet unfinished.

Unlike some exemption statutes (e.g., RPTL, §485-b(2)(b)(3)), section 421-f does not state that the property owner must submit a certificate of occupancy with his or her exemption application. Yet, we have designed the statutorily required exemption application form (RP-421-f) to request that a copy of such a certificate be attached to the application (question 6.b.), and, in our opinion, the Legislature intended that the exemption be available only to completed improvements.

First, there is nothing in the statute stating that the exemption may be granted before the improvement is completed. Where the Legislature has seen fit to exempt property under construction, it has included specific language to that end (e.g., see RPTL, §421-d(2)(a)).

More significantly, however, is the statutory language in section 421-f describing the computation of the exemption utilizing the “exemption base”:

2. (a) Such buildings shall be exempt for a period of one year to the extent of one hundred per centum of the increase in assessed value thereof attributable to such reconstruction, alteration or improvement and for an additional period of seven years subject to the following:

(i) The extent of such exemption shall be decreased by twelve and one-half per centum of the “exemption base” each year during such additional period. The “exemption base“ shall be the increase in assessed value as determined in the initial year of the term of the exemption, except as provided in subparagraph (ii) of this paragraph.

(ii) In any year in which a change in level of assessment of fifteen percent or more is certified for a final assessment roll pursuant to the rules of the state board, the exemption base shall be multiplied by a fraction, the numerator of which shall be the total assessed value of the parcel on such final assessment roll (after accounting for any physical or quantity changes to the parcel since the immediately preceding assessment roll), and the denominator of which shall be the total assessed value of the parcel on the immediately preceding final assessment roll. The result shall be the new exemption base. ***

That is, the exemption base is set in year one of the exemption. The base changes only if a change in level of assessment of 15 percent or more occurs. If the base were to be computed before the improvement is completed, some of the value of that improvement might never be included in the base, clearly not what the Legislature was contemplating.

November 6, 1995


{1}  For a discussion regarding the assessment of partially completed improvements, see 4 Op.Counsel SBEA No. 103.

Updated: