Pertaining to the partial tax exemption on real property of senior citizens
Table of contents
Questions and Answers
- Local Authorization for the Exemption
- Application for the Exemption
- Amount and Type of Exemption
- Age Requirements
- Ownership Requirements
- Residency and Occupancy Requirements
- Income Requirements
Section 467 of the Real Property Tax Law (RPTL) authorizes any municipal corporation (i.e., county, city, town, village or school district) to enact a local law, ordinance or resolution granting a 50 percent tax exemption on real property owned by persons 65 years of age or over who meet the statutory qualifications.
Each municipal corporation must act on its own behalf and must hold a public hearing prior to the adoption of any such local law, ordinance or resolution. (School districts may adopt this exemption by resolution only, since they are not authorized to enact local laws or ordinances.) A granting municipal corporation's local law, ordinance or resolution must set an income limitation for otherwise qualified persons at any figure between $3,000 and $29,000. A copy of the local law, ordinance or resolution should be transmitted to the assessor or assessors who prepare the assessment roll or rolls that will be affected by such exemption.
Section 467 also authorizes municipalities to grant a lesser exemption for otherwise qualified persons whose incomes exceed the local income limitation by less than $5,700 thereby allowing such persons to receive a partial tax exemption on their real property ranging from 45% to 20% of such property's assessed value, depending on their income. Municipalities are also authorized to adopt a local law, ordinance or resolution allowing a further reduced exemption for persons whose incomes exceed the local income limit by $5,700 or more but by less than $7,500; such persons are eligible for an exemption of 15% or 10% of assessed value, depending on income. Municipalities may also adopt a local law, ordinance or resolution allowing a further reduced exemption of 5% for persons whose incomes exceed the local limit by $7,500 or more but by less than $8,400.
The exemption, when authorized by a locality, is not an automatic exemption since certain qualifications with respect to age, ownership, residence, occupancy and income must be met each year. Any person initially claiming the exemption must apply for it, and the assessor must determine whether, on the basis of the information presented in the application form, the applicant is entitled to the exemption. Furthermore, unless the locality has officially chosen not to require annual re-application by a person who has received the exemption for five consecutive years, the person claiming exemption must file a renewal application every year.
While the exemption provided by RPTL §467 is not automatic, an owner receiving this exemption is automatically qualified to receive the STAR exemption provided by RPTL §425.
Note: When the property is owned by one or more persons, some of whom qualify for this exemption and the others of whom qualify for the persons with disabilities and limited incomes exemption provided by RPTL §459-c, the owners have the option of choosing the more beneficial exemption. The owners may not be prohibited from taking one of these two exemptions solely because the owners qualify for more than one exemption.
The following pages contain questions and answers that explain the requirements for claiming and securing the exemption.
Questions and answers
1. How is the exemption granted?
Any municipal corporation (i.e., county, city, town, village or school district) is authorized, after a public hearing, to enact a local law, ordinance or resolution granting a 50 percent tax exemption on real property owned by persons 65 years of age or over who meet the statutory qualifications. School districts, which are not authorized to act by local law or ordinance, may adopt resolutions granting the exemption from school taxes. Additionally, municipalities offering the sliding scale exemption may terminate the exemption at any one of three levels: (a) the 20% level, where income is M $4,800 or more but less than M + $5,700; (b) the 10% level, M + $6,600 but less than $7,500; or (c) the 5% level, M + $7,500 but less than $8,400. So, where M is at the current statutory maximum of $29,000, the most generous municipalities may grant a 5 percent exemption to senior citizens whose incomes are as high as $37,399.99.
2. Is every county, city, town, village or school district required to grant the exemption?
No. The decision as to whether the exemption is to be granted rests with the legislative body of each county, city, town, village or school district.
3. If a county adopts a local law granting the exemption, must all other municipal corporations in the county also grant the exemption?
No. If a county grants the exemption, it applies only to county taxes and does not apply to taxes levied by or for other localities within the county. Similarly, if the exemption is granted by a town, it would apply only to town taxes and not to village taxes.
4. May a village, which has terminated its assessing unit status as provided in section 1402(3) of the RPTL, grant the exemption?
Yes. A non-assessing unit village is still a municipal corporation and the village board of trustees is authorized to grant (or decline to grant) the exemption for village tax purposes. The town (or county) assessor will administer the exemption on the village's behalf.
5. May a county, city, town, village or school district modify in any way the qualifications set forth in section 467 of the RPTL that owners must meet in order to receive an exemption?
No. However, the law requires a granting municipality to set the income limitation at any figure between $3,000 and $29,000 The law also allows a municipal corporation to adopt a lesser partial exemption for otherwise qualified persons whose incomes exceed such limit by less than $5,700, a further reduced exemption for persons with incomes $5,700 - $7,500 above such limit, and a final reduced exemption for persons with incomes $7,500 - $8,400 above such limit.
6.May a municipality rescind the exemption in a subsequent year?
1. Must an application be filed each year?
Yes. An annual application must be filed in all localities outside New York City except those which have acted to eliminate this requirement for persons who have received the exemption for five consecutive years (see below).
The application forms to be used are RP-467 (for the initial application) and RP-467-Rnw (for renewal applications). In New York City a renewal application must be filed every two years from the date the exemption was granted.
Local governments outside New York City may, after a public hearing, enact a local law, ordinance, or resolution eliminating the annual filing requirement for senior citizens who have been granted the exemption on five consecutive completed assessment rolls. If the locality has exercised this option, rather than file a renewal form each year, a senior citizen who has received the exemption for five consecutive years is required, upon payment of taxes, to submit a sworn affidavit stating that he or she continues to be eligible for exemption. Two forms are to be used for this purpose: RP-467-aff/ctv (for exemption from county, city/town, or village taxes) and RP-467-aff/s (exemption from school taxes). The affidavits should be filed with the city, town, village, or school tax collector, as appropriate. Failure to file the necessary affidavits requires termination of the exemption. For the purposes of determining who is allowed to file an affidavit rather than a renewal application, "five consecutive assessment rolls" includes any years when the exemption was granted to a property owned by a spouse or married couple while both resided on the property.
If the option to allow filing of the above affidavits has not been exercised, a new application for exemption must be filed each year on or before the appropriate taxable status date. However, once proof of age, legal residence, and ownership is established, it will not be necessary to submit such proof in later years unless specifically requested by the assessor. The renewal application form (RP-467-Rnw) provides for the reporting of income, which is the item most subject to change from year to year and is, therefore, one of the principal reasons for requiring an annual application. This is especially true for municipal corporations that authorize the sliding-scale reduced exemption option. An income change of but a few hundred dollars could place the applicant in a different exemption category.
2. Where may the application forms for the exemption be obtained?
The application forms (RP-467 and RP-467-Rnw) and the affidavits ( RP-467-aff/ctv and RP-467-aff/s ) may be obtained from the assessor's office or the ORPS website at tax.ny.gov/forms/orpts/exemption.htm. However, at least sixty days prior to the appropriate taxable status date, the assessor must mail to each person who was granted the exemption on the latest final assessment roll an application form and a notice that such application must be filed on or before taxable status date and be approved in order for the exemption to be granted on the next tentative assessment roll.
3. When must the application be filed?
The initial and renewal applications generally must be filed each year on or before the appropriate taxable status date. Taxable status date in most towns is March 1. In Nassau County, taxable status date is January 2, but that county is authorized to establish a later filing date. Westchester County towns have either a May 1 or June 1 taxable status date. In cities, taxable status date is determined from charter provisions and the city assessor should be consulted to determine the appropriate date. Taxable status date for most villages which assess is January 1, but the village clerk should be consulted for variations.
The annual deadlines for the filing of applications for exemptions from school district and county taxes are based upon the taxable status date of the city or town assessment roll upon which the county or school taxes will be levied. For example, if the last date for filing an application for exemption from town taxes is March 1, then the application for exemption for school district or county taxes would also be March 1. The town taxable status date also controls for purposes of non-assessing unit villages (RPTL §1402(3)).
Affidavits in lieu of application forms must be submitted to the collecting officer of each taxing jurisdiction upon payment of taxes.
Yes, in five situations;
- if specifically allowed by local law, an application for exemption may be filed with the assessor after taxable status date, but not later than the last date for filing complaints with respect to assessments, where failure to file a timely application is the result of (a) death of the applicant's spouse, child, parent, brother or sister or (b) illness of the applicant or of the applicant's spouse, child, parent, brother, or sister, which actually prevented the applicant from filing on a timely basis, as certified by a licensed physician.
- if specifically allowed by local law, a renewal application may be filed after taxable status but before the date the board of assessment review meets to hear complaints.
- Nassau County may adopt a local law or ordinance to accept applications for this exemption on some other later date than is usually required by law without penalty to the property owner.
- The New York City senior citizen application filing deadline is March 15th.
- Lastly, if the applicant has purchased property after taxable status date, the applicant has 30 days after title acquisition to file for an exemption. In such case, if the exemption is granted, a pro rata tax credit is computed by multiplying the exemption amount by the appropriate tax rates and by the fraction of each fiscal year remaining after the date of acquisition. These credits are then applied to the taxes owed on the seniors' property in those next fiscal years. Tax credits in excess of taxes owed will be paid within 30 days of the expiration of the tax warrant for that fiscal year.
5. Where should the application for exemption be filed?
The application should be filed in the office of the assessor who prepares the city, town or village assessment roll that will be used in levying the taxes from which the exemption is sought. In a case where the county or school district in which the property is located has granted such an exemption, the application should be filed in the office of the assessor of the city or town in which the property is located since the city or town assessment roll is used in levying county and school district taxes.
A special situation exists in Tompkins and Nassau Counties. In Nassau County, applications for partial exemption from county, town or school district taxes should be filed with the Nassau County Board of Assessors while applications involving any city taxes should be filed in the city assessor's office. In Tompkins County, applications for partial exemption from county, city, town, village or school district taxes should be filed with the Tompkins County Division of Assessment.
Affidavits in lieu of application forms (see Question B.1) should be filed with the collecting officer of each taxing jurisdiction granting the exemption. The affidavit required for county and city/town exemption must be filed with the city/town tax collector, the affidavit required for village exemption with the village tax collector, and the affidavit required for school tax exemption with the school tax collector.
6. If the property is owned by more than one person, must each owner sign the application or affidavit?
Yes. All of the owners must sign.
7. Will the applicant be notified of receipt of the application and its determination?
The applicant may submit a stamped, self-addressed envelope with the application for exemption. If this is done for applications filed by taxable status date, the assessor must notify the applicant of the assessor's approval or denial of the application within 3 days of the completion and filing of the tentative assessment roll (on or before May 1 in towns having a March 1 taxable status date). The notice of denial must be on a form prescribed by the Office of Real property tax Services (RP-467 Dnl), indicate the reason(s) for denial, and advise the applicant of his or her right to a review of the assessor's decision. If a second stamped, self-addressed envelope is submitted, the assessor must also notify the applicant of the receipt of his or her application for exemption.
A notice of acceptance and the exempt amount, or a notice of denial and the right to appeal, must be mailed to the applicant as follows:
- for applications regarding property purchased after the levy of taxes, within 30 days of receipt of the application;
- for applications regarding property purchased after taxable status date but prior to the levy of taxes, within 10 days of the filing of the tentative roll (for determinations made prior to the filing of the tentative roll) or within 10 days of the assessor's petition to the board of assessment review to correct the roll (for determinations made after filing the tentative roll).
8. Who determines eligibility for exemption?
Whether or not the applicant meets the statutory requirements for exemption is determined by the assessor.
9. May an application for exemption be approved or granted by an assessor under state law if the locality whose taxes will be affected has not authorized the exemption?
1. What is the amount of the exemption?
Where the base exemption has been adopted and the owner or owners qualify for the maximum exemption pursuant to section 467, the property is exempt from taxation to the extent of 50 percent of the assessed value of the property. This means that taxes will be levied on only 50 percent of the total taxable assessed valuation of the property which appears on the assessment roll.
If locally authorized, any of three sets of lesser partial exemptions may be granted to a qualified owner or owners. Each option must be explicitly adopted by a new or amended local law, ordinance or resolution. The percentage of exemption depends on the income of the owner or combined income of all the owners, as follows:
|Annual income||Percentage of exemption|
|more than M*||but less than||M* + 1,000||45%|
|M* + 1,000 or more||but less than||M* + 2,000||40%|
|M* + 2,000 or more||but less than||M* + 3,000||35%|
|M* + 3,000 or more||but less than||M* + 3,900||30%|
|M* + 3,900 or more||but less than||M* + 4,800||25%|
|M* + 4,800 or more||but less than||M* + 5,700||20%|
Option 2: (This option consists of Option 1 plus two additional income/exemption categories.)
|Annual income||Percentage of exemption|
|M* + 5,700 or more||but less than||M* + 6,600||15%|
|M* + 6,6000 or more||but less than||M* + 7,500||10%|
Option 3: (This option consists of Option 2 plus one additional income/exemption category.)
|Annual Income||Percentage of exemption|
|M* + 7,500 or more||but less than||M* + 8,400||5%|
*In these charts, M represents the maximum income eligibility level chosen by the municipal corporation for the base (50%) exemption. Currently, M may be any figure not less than $3,000 nor more than $29,000.
2. May the exemption be granted in addition to any other partial exemptions to which the property may be entitled?
Yes. The senior citizens exemption is in addition to other partial exemptions such as those granted to the property of veterans and clergy. An owner receiving this exemption is automatically qualified to receive the STAR exemption provided by RPTL §425. However, this exemption may not be granted to property currently receiving a tax abatement pursuant to RPTL Section 467 c (Rent controlled property occupied by senior citizens in New York City).
3. How is the exemption computed where the property is also entitled to a veterans exemption or other partial exemption?
The senior citizens exemption is to be computed after all other partial exemptions, except the School Tax Relief (STAR) exemption, have been deducted.
4. What types of taxes are covered by the exemption?
The exemption applies only to taxes imposed upon the property for municipal or school district purposes by or on behalf of the county, city, town, village or school district which has granted the exemption. Special ad valorem levies and special assessments are not included in the exemption. Examples of these are assessments for street, water or sewer improvements or levies on behalf of town improvement districts, such as fire, water, sewer districts, etc.
5. May an exemption from school taxes be granted if a child resides on the property and attends any public elementary or secondary school (i.e., grades K-12)?
Yes, but only if a school district allowing the exemption also adopts a separate resolution to allow the exemption on such property. However, the school district resolution authorizing the exemption must provide that satisfactory proof is required that the child was not brought into the residence primarily for the purpose of attending a particular school within the district.
6. May an exemption from school taxes be granted if a child resides on the property and attends a private or parochial school?
Yes. The exemption may be granted in such situations regardless of whether the school district adopts a separate resolution allowing the exemption on property where a child resides and attends a public school.
1. What are the age requirements?
The owner, or if the property is owned by more than one person, all of the owners (except in the case of spouses and siblings), must be 65 years of age or over on taxable status date, unless a specific local option has been enacted by the taxing jurisdiction. This option provides that exemption may be allowed to otherwise eligible senior citizens who become 65 after taxable status date but on or before December 31 of the calendar year. However, the applicant is still required to file the application for exemption on or before taxable status date, except in the case of property purchased after taxable status date (see Question B.4, above).
Under certain circumstances a surviving spouse 62 years of age or over may be eligible (see Question 3).
2. If the property is owned by a married couple or by siblings, only one of whom is 65 years of age or over, is the property eligible for exemption?
Yes. When property is owned by a married couple or by siblings, only one spouse or sibling is required to be 65 years of age or over. However, all remaining requirements must be satisfied. A sibling is defined as a brother or sister, whether through whole blood, half blood, or adoption.
The law provides that an exemption once granted on property owned by a married couple shall not be rescinded so long as the surviving spouse is at least 62 years of age. For example, if a married couple owned property on which an exemption was in effect when one spouse died leaving sole title to a surviving widow or widower who was at least 62 years of age, the widow or widower would continue to qualify for exemption on the same property in subsequent years.
4. When by reason of the death of one spouse a surviving spouse who is less than 62 years old becomes the sole owner of previously exempt property, does the property remain eligible for exemption?
No. The surviving spouse, less than 62 years of age and now sole owner of the property, does not meet the age requirement of the exemption statute. To satisfy this requirement, the surviving spouse must attain the age of 65.
5. Does the applicant have to prove his age?
Yes. Satisfactory proof of age must be furnished. Whenever possible, the proof should be attached to the application.
6. How does an applicant prove his or her age?
The preferable type of proof is a birth certificate or baptismal certificate. If these are not available, then an affidavit of age from the Social Security Administration, hospital birth record, voters registration record, insurance policy, census record, marriage record, passport, military record, immigration documents or other reliable records which show age would be considered.
Once proof of age is verified, no proof will be required in subsequent years unless specifically requested by the assessor.
1. What are the ownership requirements?
In order to qualify for the partial exemption, the applicant must show that title has been vested in the owner or all of the owners for at least 12 consecutive months prior to the date of filing the application. In computing the 12-month period.
- The period of ownership is not interrupted by:
- A transfer of title to one spouse from the other;
- A transfer of title to a surviving spouse from a deceased spouse either by will or operation of law;
- A transfer of title to the former owner(s), provided that the reacquisition occurs within nine months after the initial transfer from the owner(s) and the property was receiving the senior citizens exemption as of that date;
- A transfer of title to a person or persons maintaining the property as a primary residence at the time of death of the former owner(s), provided that the transfer occurs within nine months after the death of the former owner(s) and the property was receiving the senior citizens exemption as of that date.
- The period of ownership of a prior residence may be considered where:
- There was a taking of the property by condemnation or other involuntary proceeding (except a tax sale) and another property has been acquired to replace the property taken;
- The prior residence has been sold and a replacement purchase made within one year, if both residences are within New York State.
2. When a residence is appropriated by a governmental authority for a public purpose and the former owner of such property acquires a replacement residence, may the periods of ownership of both properties be combined in computing the required one-year period of ownership?
Yes. Because the former property was taken by an involuntary proceeding other than a tax sale, the period of ownership is not interrupted by the taking.
3. Where a New York State residence is voluntarily sold and within one year a replacement residence is acquired in the same or another municipality within New York State, may the periods of ownership of both properties be combined in determining the eligibility for exemption from taxes to be levied for town purposes?
Yes. Where a residence is sold and replaced with another within one year and both residences are within New York State, the periods of ownership of both properties may be combined for purposes of the exemption by a municipality within the State granting the exemption.
4. If property has been owned solely by a spouse, and upon the death of the sole owner title to the property vests solely in the surviving spouse, who is otherwise qualified for exemption, must the survivor own the property for 12 consecutive months before the property will qualify for the exemption?
No. Where title to the property was solely in the name of a deceased spouse and the surviving spouse succeeds to title by will or operation of law, the period of ownership of the deceased spouse shall be counted for purposes of the 12-month ownership requirement.
5. How may the applicant prove ownership of the property and the length of time title has been vested in him or her?
Proof of ownership may consist of a certified copy of the deed or other instrument by which the applicant became owner of the property. Satisfactory proof of ownership which also shows that title has been vested for at least one year prior to filing the application must be furnished.
6. What type of title must the applicant or applicants have?
The title to the property must be as an estate in fee or a life estate. Title may be held by a guardian or committee for any person who would otherwise be entitled to claim the exemption. Interests in property which are less than a life estate, such as an estate for a term of years or a leasehold estate, do not qualify.
7. May the exemption be granted if the property has been placed in a trust?
Yes. For purposes of this senior exemption, if the title to real property is held by a trustee or trustees, the property is eligible for a property tax exemption if all of the trustees or all of the trust beneficiaries are otherwise qualified.
8. Would an otherwise qualified person, who by deed reserved a life estate and granted a remainder interest in the property to a near relative, remain eligible to receive the exemption?
Yes. It is well settled law that the holder of a life estate is entitled to full possession, use and enjoyment of the realty for the duration of his natural life and is deemed to be the owner thereof for all purposes, including taxation. The rights of a remainderman with respect to ownership of the property do not come into being until the death of the life tenant.
9. Is a dwelling which is owned by the applicant but located on leased land or land not owned by the applicant eligible for exemption?
The dwelling is eligible for exemption only if it is separately assessed to the applicant.
10. Is a trailer or mobile home located on leased lands or lands which are not owned by the applicant eligible for the exemption?
Yes. Section 102, subdivision 12(g), of the Real Property Tax Law requires a separate assessment to the owner of any trailer or mobile home which is entitled to any exemption from taxation (except for the STAR exemption).
11. Would an otherwise qualified owner in possession of property under an executory contract of sale be entitled to the exemption?
Yes, but such owner must meet the one-year ownership requirement.
12. Can the exemption be granted on property held in the name of a corporation which is wholly owned by the applicant?
No. The corporation is a separate entity and ownership by a corporation is not ownership by a natural person for exemption purposes even though the corporation is wholly owned by such person.
13. May a tenant/shareholder of a cooperative apartment corporation qualify for exemption?
Yes, at local option. An exemption may be granted to an otherwise eligible tenant/shareholder based on the percent of total cooperative apartment corporation shares held by the senior citizen/tenant. The exemption is credited against the assessed value of the cooperative corporation. The credited reduction in assessed value should be passed along through a reduction in the monthly fee charged to the eligible tenant.
14. May a condominium apartment qualify for exemption?
Yes, provided title to the apartment is held by the applicant.
15. How may the title to the property owned by more than one person be held?
Title may be held as a tenancy in common, joint tenancy, tenancy by the entirety or any other form of joint or common ownership.
16. If the property has been owned jointly by two or more persons (other than a married couple) for more than one year but one owner is under 65 years of age, will the property qualify for exemption upon conveyance of the younger owner's interest to the owner who is 65?
No. The reason for the one-year requirement is to discourage changes in ownership of property made solely to qualify for the tax exemption. The property would qualify in the third year after the conveyance. The same reasoning would apply, for example, where property is owned jointly by a father who is over 65 and a son who is under 65. A conveyance by the son to the father would not satisfy the requirement that title has been vested for that period of time.
17. Where all or part of the title to real property is transferred between spouses, does the required one-year period of ownership begin to run anew from the time of such transfer?
No. The period of ownership by the transferor spouse is deemed to be also a period of continuous ownership by the transferee spouse for the purpose of computing the required one-year period of ownership. In other words, a transfer of title to real property between otherwise qualified spouses does not defeat their right to the exemption.
1. What are the residency and occupancy requirements?
There are three requirements. These are: (1) the property must be the legal residence of the applicant or applicants, (2) the property must be used exclusively for residential purposes, and (3) the property must be occupied in whole or in part by the applicant or applicants.
2. Can a person have more than one legal residence?
No. For example, if a person lives part of the year in one house and part of the year in another, only one of the dwellings can be his or her legal residence. Which house is the legal residence depends upon such factors as where the person votes, the length of time spent in each place, and other conduct and behavior that shows which house is the person's permanent home.
3. When is the property occupied in whole or in part by the applicant or applicants?
The applicant or applicants must reside in at least part of the dwelling on the property. Other parts of the dwelling may be occupied by others so long as their occupancy is solely for residential purposes.
4. Can the exemption be granted if an otherwise qualified owner is absent from the property while receiving health-related services as an inpatient in a residential health care facility?
Yes, provided that during such confinement no one other than the spouse or co-owner of the confined owner occupies the property.
5. When is the property used exclusively for residential purposes?
The entire property must be used solely as a residence. However, if a portion of the property is used for other than residential purposes, the exemption will apply only to the portion used exclusively for residential purposes. For example, if part of the property is used for a store or business, or for farming, that portion which is used exclusively for residential purposes may qualify for exemption. Thus, the assessor may grant the exemption by distributing or apportioning the assessed valuation of the property between the residential (exempt) and nonresidential (taxable) portions and applying the exemption only to the residential portion. In this mixed-use situation, however, since only a portion of the entire property (i.e., that portion used exclusively for residential purposes) may qualify for exemption, the percentage of exemption granted vis-a-vis the assessed valuation of the property as a whole is lessened.
6. May a municipality grant an exemption to a home and a large tract of land surrounding such home?
No. Although the statute contains no specific maximum acreage requirement, it does require that the property be used exclusively for residential purposes. However, as indicated in Question 5, if a portion of the property is used for nonresidential purposes, the exemption can be granted only to the remaining portion used exclusively for residential purposes. Thus, the assessor may apportion the assessment to grant an exemption to the residential portion of a large tract.
7. Must the applicant or applicants be citizens of the United States?
No. An alien can qualify for the exemption. However, the residency and occupancy requirements still must be satisfied.
8. May the exemption be granted if a married couple jointly own the property but are legally separated and only one of them lives on the property?
Yes. Additionally, a previously granted exemption may be continued despite the absence of one owner from the residence provided that (1) an exemption was granted when both spouses resided in the residence, (2) title is in one or both spouses, or in one or both ex-spouses, (3) the person remaining on the property is at least 62 years of age, and (4) all other requirements of the law are satisfied.
To qualify for the 50 percent exemption, the combined income of all of the owners for the income tax year preceding application cannot exceed $3,000, or such other sum not less than $3,000 nor more than $29,000 as prescribed by the local law, ordinance or resolution adopted pursuant to section 467. If a lesser partial exemption has also been authorized, the combined income of all the owners may not exceed a certain level (see chart, Question 1). If the title is vested in one spouse, the combined income of both spouses cannot exceed the limit prescribed by the local law, ordinance or resolution.
The restriction on income is different in the case of certain separated spouses. Where a spouse or ex-spouse is absent from the property as a result of divorce, legal separation, or abandonment, only the income of the spouse or ex-spouse residing on the property is to be considered in determining eligibility for exemption.
2. What is the income tax year?
The income tax year means the twelve-month period for which the owner(s) files a federal personal income tax return, or, if no such return is filed, the calendar year.
3. What sources of income are considered in order to determine whether the income limit is exceeded?
Income from all sources (except gifts, payments made to individuals because of their status as victims of Nazi persecution, inheritances, and certain other types of income described in Question 5) is required to be considered in determining eligibility for exemption. Income includes all social security payments, salary and wages (including bonuses), interest (including nontaxable interest on state or local bonds), total dividends, net earnings from farming, rentals, business or profession (including amounts claimed as depreciation for income tax purposes), income from estates or trusts, gains from sales and exchanges, the amount received from retirement or pension plans, annuity payments (excluding amounts representing a return of capital), alimony or support payments, unemployment insurance payments, and disability payments, worker's compensation, etc. However, income received by an owner in a residential health care facility is considered income only to the extent it exceeds the amount paid for care in the facility (see Question 6).
Municipalities that have elected to allow the exemption may additionally amend such local law, ordinance, or resolution to exclude (1) all medical and prescription expenses which are not reimbursed or paid by insurance, (2) veteran's disability compensation as defined in Title 38 of the United States Code, or (3) both (1) and (2) from the computation of an applicant's income.
4. What proof of income should the applicant submit?
If a federal or New York State income tax return was filed by any of the owners of the property or their spouses for the preceding year, a copy of such return should be submitted with the application. In addition, the owners may be required to submit statements of payments made by the Social Security Administration, bank statements, rent receipts or other documents to substantiate the statement of income set forth in the application.
5. Are gifts and inheritances considered income?
No. The law specifically excludes gifts and inheritances. Welfare payments are gifts and therefore are not included as income in determining whether the income limit has been exceeded. Similarly, Supplemental Security Income (SSI) payments are considered gifts and therefore are not included as income.
Also excluded from the definition of income is payment received for participation in the federal Foster Grandparents Program or because of a person's status as a victim of Nazi persecution.
6. Is income received by an owner, spouse or co-owner who is absent from the property while receiving health-related care as an inpatient of a residential health care facility considered in determining whether the income test is satisfied?
Yes, but only to the extent the amount of income received exceeds the amount paid by the owner, spouse or co-owner for care in the facility.
7. Are death benefits received by a beneficiary under a life insurance policy income?
No. Payments made to a beneficiary under a life insurance policy are in the nature of a gift and do not constitute income for purposes of this exemption. However, if such payments are made on a monthly or other deferred basis and any portion of such payment constitutes interest on the principal retained by the insurance carrier, such interest would constitute income and must be computed as such for purposes of this exemption.
8. May a depreciation deduction be allowed in determining net rental income?
9. May capital losses be deducted from income?
Yes, but capital losses may only be used to offset capital gains. Capital losses exceeding capital gains may not be used to offset other sources of income.
10. May contributions to an individual retirement account (IRA) be deducted from income?
No. Voluntary contributions to any retirement plan, and the earnings thereon, may not be deducted from income and must be included in considering whether the income limit has been exceeded. However, distributions from an IRA (representing principal and earnings) should not be treated as income.
11. Should annuity payments be included as income?
Yes, but to the extent that such payments represent a return of the taxpayer's original (capital) investment, such payments should not be included as income.
12. If title to the property is in the name of a spouse who is legally separated from his or her spouse, must the income of both spouses be combined to determine whether the limit is exceeded?
No. See question G1.
13. Should the proceeds of a reverse mortgage be included as income?
The proceeds of a reverse mortgage should not be considered income for purposes of this exemption. However, when such proceeds are invested, any interest or dividends from such investment should be considered as income. Also, monies used to repay a reverse mortgage may not be deducted from income.
Please send general questions or comments to ORPTS.