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Volume 10 - Opinions of Counsel SBRPS No. 99

Opinions of Counsel index

Senior citizens exemption (income requirement) (nursing home expenses-extent of allowable deduction) - Real Property Tax Law, § 467:

As a general rule, only the income of the person confined in the nursing home may be deducted in determining income eligibility for purposes of the senior citizens exemption. Where, however, the municipality has adopted the medical cost deduction option, amounts paid by the confined person’s spouse for such nursing home care, if not reimbursed by insurance, may be deducted from income.

Our opinion has been requested concerning the senior citizens exemption (Real Property Tax Law, §467). The facts are that a husband and wife have a combined income of $28,900. The wife, however, has now been confined to a nursing home at an annual cost of some $15,000. The wife’s sole income is social security of $8,000. The question is whether the balance of the nursing home costs may be deducted from the husband’s income in determining income eligibility for the exemption.

The income test of eligibility for the exemption, as set forth in section 467(3)(a), is quite inclusive (see, Engle v. Talarico, 33 N.Y.2d 237, 306 N.E.2d 796, 351 N.Y.S.2d 677 (1973)). In a 1972 opinion discussing the income requirement, we noted, in part, “Expenditures for personal medical expenses are not deductible...” (2 Op.Counsel SBEA No. 65).

Subsequently, the statute was amended by chapter 440 of the Laws of 1985 to address nursing home situations, both as to residency and income. Section 467 now provides, in part:

3. No exemption shall be granted:
***
(d) unless the real property is the legal residence of and is occupied in whole or in part by the owner or by all of the owners of the property: except where, (i) an owner is absent from the residence while receiving health-related care as an inpatient of a residential health care facility, as defined in section [2801] of the public health law, provided that any income accruing to that person shall only be income only to the extent that it exceeds the amount paid by such owner, spouse, or co-owner for care in the facility, and provided further, that during such confinement such property is not occupied by other than the spouse or co-owner of such owner... (RPTL, §467(3)(d)). {1}

The sponsor’s memorandum for the bill enacted as chapter 440 states, “[B]ecause the income an institutionalized spouse or co-owner (to the extent it does not exceed the cost of institutional care) is not actually available to the spouse or co-owner remaining in the residence, it should not be counted as income in determining eligibility for exemption pursuant to section 467” (1985 NYS Legislative Annual, p.182). While the statutory language of section 467(3)(d) is not entirely clear, given the sponsor’s memorandum, it appears that this provision is intended to allow for deduction of only the confined person’s income (up to the cost of such confinement).

More recently, however, the statute was again amended to permit, at local option, a deduction for unreimbursed medical and prescription drug expenses (L.1996, c.313). We discussed this provision at length in 10 Op.Counsel SBRPS No. 28. We said:

Section 213 of the Internal Revenue Code (26 USCS) entitled “Medical, dental, etc., expenses,” permits, in certain circumstances, an itemized deduction for such expenses which are “not compensated for by insurance or otherwise” (26 USCS §213(a)). The term “medical care” is defined (in §213(d)(1)(A)) to include ... certain lodging costs for treatment away from home (26 USCS §213(d)(1)(B), (C), and (2)).

Examples of expenses incurred for the prevention or alleviation of a physical or mental defect or illness include ... nursing services ... (47A C.J.S. Internal Revenue §182, citing Internal Revenue Regulation 1.213-1).

As to nursing homes specifically, Internal Revenue Service Publication 502 (“Medical and Dental Expenses”) states:

You can include in medical expenses the cost of medical care in a nursing home or home for the aged for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if the main reason for being there is to get medical care.

Do not include the cost of meals and lodging if the reason for being in the home is personal. You can, however, include in medical expenses the part of the cost that is for medical or nursing care (Pub. 502 [For 1999 Returns], p.10; emphasis added).

Reading all of this material together, we conclude that, where the medical cost deduction option has not been adopted, only the income of the person confined in the nursing home may be deducted in determining income eligibility for section 467 purposes (in this case, only the wife’s $8,000 income). Where, however, the municipality has adopted the medical cost deduction option, (unreimbursed) amounts paid for nursing home care (along with other unreimbursed medical and prescription drug costs) may be deducted from income. (If applicable here, the husband’s $7,000 contribution toward the cost of his wife’s nursing home costs would then be deductible.)

February 11, 2000


{1}  This provision and a somewhat similar provision in the school tax relief [STAR] exemption (RPTL, §425) are discussed in 10 Op.Counsel SBRPS No. 69 (rev.).

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