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Volume 10 - Opinions of Counsel SBRPS No. 31

Opinions of Counsel index

Senior citizens exemption (income requirement) (executor’s and administrator’s commissions) - Real Property Tax Law, § 467:

Commissions received by a fiduciary (e.g., as executor or administrator of an estate), are presumed to be income for purposes of the senior citizens exemption (Real Property Tax Law, §467). They are not income, however, if the applicant can prove that they were in fact a bequest (i.e., a gift).

We have been asked if moneys received as an executor’s commission are income for purposes of the senior citizens exemption (Real Property Tax Law, §467).

Income is defined in section 467(3)(a) as including:

social security and retirement benefits, interest, dividends, total gain from the sale or exchange of a capital asset which may be offset by a loss from the sale or exchange of a capital asset in the same income tax year, net rental income, salary or earnings, and net income from self-employment, but shall not include a return of capital, gifts, inheritances, payments made to individuals because of their status as victims of Nazi persecution, as defined in P.L. 103-286 or monies earned through employment in the federal foster grandparent program and any such income shall be offset by all medical and prescription drug expenses actually paid which were not reimbursed or paid for by insurance, if the governing board of a municipality, after a public hearing, adopts a local law, ordinance or resolution providing therefor. In computing net rental income and net income from self-employment no depreciation deduction shall be allowed for the exhaustion, wear and tear of real or personal property held for the production of income;

As we have discussed in numerous opinions, this definition is a most inclusive one, one that evidences the Legislature’s intent to apply a cash inflow test of eligibility for the exemption (e.g., 1 Op.Counsel SBEA No. 98).

It is also true, as we stated in 10 Op.Counsel SBRPS No. 12, “whether moneys received are taxable or nontaxable for income tax purposes is not dispositive of the issue of inclusion or exclusion for purposes of the senior citizens property tax exemption (Engle v. Talarico, 33 N.Y.2d 237, 306 N.E.2d 796, 351 N.Y.S.2d 677 (1973)).” Yet, this is not to say that we are precluded from looking to the income tax law for guidance.

In discussing such commissions for purposes of Federal income taxation, it has been stated:

[I]f a fiduciary receives commissions for his services as executor, administrator or trustee, these payments are taxable income.... The basic test is whether the fiduciary must perform services in order to earn his right to the payment, and not what the payment is called. If services are required, the amount he receives is taxable income. But if he is entitled to the payment regardless of whether he performs fiduciary duties, the payment is a nontaxable bequest (33A Am Jur 2d, Federal Taxation (1997) ¶8117).

We think it appropriate to follow a similar rule in administering section 467. In the first instance, if the applicant indicates the receipt of commissions as a fiduciary, they should be presumed to be income. They would not be income if the applicant can prove that they were in fact a bequest (i.e., a gift).

March 13, 1997

Updated: