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Volume 2 - Opinions of Counsel SBEA No. 65

Opinions of Counsel index

Aged exemption (income requirement) (mortgage payments, costs of home repairs, heat, light, medical expenses) - Real Property Tax Law, § 467(3)(a):

In computing gross income for purposes of this section, with respect to property which is not income producing, no part of the mortgage payments, nor the cost of home repairs, nor the expenses for heat and lighting may be deducted. Where property is income producing, expenses involved in maintaining the rented portion of the property (e.g., taxes, insurance, maintenance, repairs, etc.) are proper deductions in computing gross income. Expenditures for personal medical expenses are not deductible irrespective of whether the property is or is not income producing.

We have received an inquiry concerning the income requirements of section 467 of the Real Property Tax Law, the statute authorizing a partial exemption on real property owned by certain elderly persons.

The question is whether mortgage payments, the cost of home repairs, and expenses for heat, lighting, as well as personal medical expenses are deductible from gross income when computing income for purposes of this exemption.

Section 467 of the Real Property Tax Law provides that no exemption shall be granted where the income of the owner or owners, and combined income of husband and wife, exceeds a figure set by the municipality granting the exemption. A municipality has the option of setting the income limitation at any figure between $3,000 and $6,000. Income includes social security and retirement benefits, interest, dividends, net rental income, salary or earnings, and net income from self-employment, but does not include gifts and inheritances.

For purposes of section 467, income means gross income except for rental income and income from a business or profession. Therefore, with respect to property which is not income producing, no part of the mortgage payments, nor the cost of home repairs, and expenses for heat and lighting may be deducted from gross income. Expenditures for personal medical expenses are not deductible irrespective of whether the property is or is not income producing.

Where a property is income producing, that is, where a portion of the property not occupied by the applicant is rented to others for residential purposes, only net rentals derived from such property are to be computed as income for purposes of section 467. Therefore, expenses (taxes, insurance, maintenance, repairs, etc.) involved in maintaining the rented portion of the property would be a proper deduction to arrive at net income. Of course, in such situation the portion of the expenses allocated to that part of the property or apartment occupied by the owner would not be a deduction against gross income.

The apparent intention of the Legislature in enacting the income requirement of section 467 was to exclude anyone who had a set amount of cash accruing to him with which to meet expenses during the calendar year preceding the date of making application for exemption. It was apparently felt that only certain aged persons meeting the other requirements of the statute but whose cash inflow was less than the limitation set by the granting municipality should receive the benefit of the partial exemption from real property taxes.

April 17, 1972

NOTE:  Construes law prior to L.1996, c.313.

Updated: