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Volume 3 - Opinions of Counsel SBEA No. 6

Opinions of Counsel index

Veterans’ exemption (eligible funds) (subsistence allowance) - Real Property Tax Law, § 458:

Where a veteran, during his education or training, purchases real property with subsistence allowance moneys, the use of such eligible funds for exemption purposes is limited to the reasonable rental value of the property purchased by the veteran. Where a veteran purchases real property after his education or training, only that portion of his subsistence allowance not applied toward his education, and which remains after deducting the reasonable cost of his subsistence, qualifies for exemption purposes.

We have been asked to clarify the status of the instructions contained in the application for the veterans’ exemption from real property taxes (Real Property Tax Law, §  58) with respect to veterans of the Korean or Vietnam conflicts.

The instruction reads as follows:

III. WHAT ARE ELIGIBLE FUNDS?
A. The following have been held to include eligible funds and hence real property purchased with such funds is entitled to exemption:

* * *

10. Subsistence allowance under “GI Bill of Rights” including such allowance in connection with college and school education and training, on-the-job training, apprentice training and vocational rehabilitation programs. Exemption is limited (a) to the reasonable rental value to the veteran of the necessary dwelling premises which he purchased with subsistence allowance during his schooling or training and which he actually occupied during such period (of course, not exceeding the amount of subsistence allowance actually used in the purchase), or (b) if property is purchased with subsistence allowance after payment is terminated, to an amount (used to purchase real property) equal to the excess, if any, of such allowance over and above the reasonable cost of subsistence. The use of other funds for subsistence does not permit application of unused subsistence allowance as eligible funds under provision (b); Post World War II veterans do not receive separate subsistence allowances and any portion of education or training benefits not actually used for tuition, books, supplies, fees, etc. is considered a subsistence allowance and is treated in the manner described in this paragraph.

In order to qualify for this exemption, a veteran (or such other person described in section 458) must have received eligible funds from the United States Government or the State of New York, and he must have used such funds in the purchase of real property. Having once disposed of such eligible funds for any purpose other than the purchase of real property, he cannot at a later date make application for exemption based upon the same eligible funds.

Title 38, Chapter 34, section 1681 of the United States Code provides:

a. The Administration shall . . . pay to each eligible veteran who is pursuing a program of education under this chapter an educational assistance allowance to meet, in part, the expenses of his subsistence, tuition, fees, supplies, books, equipment, and other educational costs. (emphasis supplied)

Pursuant to this chapter, a veteran of the Korean or Vietnam conflicts receives a monthly lump sum payment to be applied toward the payment of all of the above expenses, whereas under prior plans (for World War II veterans), the administration paid tuition, fees, etc. directly to the school, and the veteran received a separate payment solely for subsistence.

One of the purposes of subsistence allowances and on-the-job training allowances is to assist the veteran in meeting living expenses during his education or training; one of the purposes of section 458 of the Real Property Tax Law is to encourage veterans to purchase real property in the State of New York. With such purposes in mind, it has consistently been held that such funds are eligible for veteran exemption purposes on a limited basis (1949, Op.Atty.Gen. 187; 12 Op.State Compt. 151).

If the veteran purchased real property during his education or training, and used the funds in question toward the purchase of such property, he has used such funds for the purposes for which they were granted in the first instance (his subsistence), and he has also used such funds for the purposes of section 458 (purchasing real property with eligible funds). However, even in this case, eligible funds would be limited to the reasonable rental value of the property purchased by the veteran since only such portion of the subsistence allowance meets the purposes set forth in the Federal and State statutes.

If the veteran does not purchase real property during his education or training, it is reasonable to assume that he used the moneys for tuition, books, supplies, fees, and his subsistence. Certainly, these are the specific purposes for which the moneys were initially granted to the veteran. Since payment is made in a lump sum, all moneys not applied toward tuition, books, supplies and fees must be considered subsistence moneys. Therefore, in a case where the veteran purchased the property after his education or training, only that portion of such moneys not applied toward his education and which exceed the reasonable cost of his subsistence qualify for exemption purposes (See, Matter of Leeds, 26 N.Y.L.J., No. 8, p. 70, col. 7 (7-12-51), aff’d, 279 App.Div. 876, 110 N.Y.S.2d 910; 1 Op. Counsel SBEA No. 29).

June 2, 1972
Revised August 29, 1974

Updated: