Volume 12 - Opinions of Counsel SBRPS No. 2
Alternative veterans exemption (computation) (municipal caps) - Real Property Tax Law § 458-a:
In computing an individual disabled veteran’s alternative veterans exemption, it is possible that the basic and combat zone portions of the exemption will be limited by the locally applicable municipal caps but that the limit on the disability portion of the exemption will not be reached.
We have received an inquiry concerning the computation of the alternative veterans exemption (Real Property Tax Law, § 458-a). There are three parts to the exemption: a basic exemption (15% of assessed value) for wartime veterans and expeditionary medal recipients (RPTL, § 458-a(2)(a)), an additional exemption (10% of assessed value) for documented service in a combat zone (458-a(2)(b)), and a third exemption for a service-connected disability (equal to one-half the disability rating - 458-a(2)(c)). The exemption is subject to dollar limitations (“caps”) set by municipalities offering the exemption. The “default” set of caps is the lesser of $12,000 or $12,000 multiplied by the State equalization rate or class ratio in special assessing units (i.e., New York City and Nassau County - RPTL, Article 18) for the basic exemption, $8,000 (also subject to equalization) for the combat zone exemption, and $40,000 (again subject to equalization) for the disability exemption. By local law, municipalities may use either of two lower or several higher sets of caps set forth in the statute (RPTL, § 458-a(2)(d)(ii)). {1} Here, the issue is the correct computation of the exemption in an assessing unit which has adopted the cap of $27,000 (for the basic exemption), $18,000 (for the combat zone exemption), and $90,000 for the service-connected disability portion.
Given the respective parts of the exemption, it is apparent that the caps for this assessing unit’s tax purposes are pegged to a $180,000 market value home (e.g., $180,000 x 15% = $27,000). Using a hypothetical veteran’s assessment of $235,000 results in the following exemption computation:
basic: $235,000 x 15% = $32,500 but exemption is limited to cap of $27,000
combat zone: $235,000 x 10% = $23,500 but exemption is limited to $18,000 {2}
When the veteran also qualifies for the disability portion of the exemption, another variable is introduced into the computation, a variable which may or may not result in the cap being reached. For example, if this same veteran has a 40 percent disability rating, this means he qualifies for an additional 20 percent exemption ($235,000 x 20% = $47,000). Since the $90,000 cap for this portion of his exemption is not exceeded, the veteran may receive the full $47,000 in addition to the basic exemption amount for which he must qualify and the combat zone exemption for which he may qualify. {3} Note, however, that the cap on the disability portion would have an effect were the veteran’s disability rating higher, say 100 percent. In that case, 50 percent of his $235,000 assessment would be $117,500, but he would be limited to the aforementioned $90,000 additional exemption. {4} As is apparent from the example provided, in computing an individual disabled veteran’s alternative veterans exemption, it is possible that the basic and combat zone portions of the exemption will be limited by the locally applicable municipal caps but that the limit on the disability portion of the exemption will not be reached.
June 4, 2008
{1} Currently, most municipalities offering the exemption can choose from eight higher sets of caps. In “high appreciation municipalities,” six still higher sets of caps are also available. A “high appreciation municipality” is defined as New York City, a county for which the State Board has established a sales price differential factor for purposes of the school tax relief (STAR) exemption (RPTL, § 425) for three consecutive years, or a city, town, or village within such a county (RPTL, § 458-a(2)(d)(ii)). The State Board lists high appreciation counties on its website.
{2} Since one cannot qualify for a combat zone exemption unless he or she also qualifies for the basic exemption (see 9 Op.Counsel SBEA No. 120), some assessing officials apparently combine these two portions of the exemption. Here, that would mean a 25 percent exemption with a cap of $45,000.
{3} i.e., for a total exemption of $74,000 or $92,000 as appropriate.
{4} i.e., for a total exemption of $117,000 or $135,000 as appropriate.
