Volume 10 - Opinions of Counsel SBRPS No. 64
Alternative veterans exemption (residence and occupancy requirement)( multi-family residence); Senior citizens exemption (residency and occupancy requirement) (multi-family residence) - Real Property Tax Law, §§ 458-a, 467:
A one, two or three family residence may be considered exclusively used for residential purposes, and, where the owner of such property qualifies for either an alternative veterans exemption or a senior citizens exemption, the exemption may be granted to the entire structure. Where a structure houses more than three families, only the applicant’s residential unit qualifies for the exemption.
We have been asked for our opinion concerning the applicability of the alternative veterans exemption (Real Property Tax Law, § 458-a) and senior citizens exemption (RPTL, § 467) to multi-family residences. The requestor has analogized multi-family residences to mixed-use property, and suggests that only that portion of the property occupied by the exemption recipient qualifies for the exemption. For example, in the case of a two or three family residence, the requestor believes that only the unit occupied by the veteran or senior citizen qualifies for the exemption. We disagree.
As originally enacted (L.1966, c.616), section 467(3)(c) provided that no senior citizens exemption could be granted unless the property was “used exclusively for residential purposes.” When the alternative veterans exemption was enacted (L.1984, c.525), section 458-a(1)(d) provided that the exemption could be granted only to the primary residence of the veteran, and that the “qualifying residential real property” for which exemption was sought was to be “used exclusively for residential purposes.” In our opinion, this language precluded any senior citizens or alternative veterans exemption where the property was used more than incidentally for non-residential purposes.
In discussing the eligibility of an apartment house for the senior citizens exemption, we stated in 4 Op.Counsel SBEA No. 115 that the law was silent as to whether the exemption could be granted to a parcel containing more than a three family residence. However, we concluded that, “Denial of the exemption on a four or more family residence would appear to be consistent with the intent of the statute.” We noted that the exemption was not intended for commercial property.
While each individual unit in a four (or more) unit property may be used exclusively for residential purposes, in our opinion, the property, taken as a whole, is not. Although a line of demarcation between a three and four family residence may seem arbitrary, we believe the Legislature did not intend to make the exemptions available, in toto, to multi-unit, income producing apartment houses. A line must be drawn somewhere, and the three family limitation is both reasonable and consistent with other provisions of the RPTL.
For example, chapter 1057 of the Laws of 1981, which added Articles 18 and 19 to the RPTL, contains this very distinction. Section 1802(1), applicable to New York City and Nassau County, defines Class one property as “all one, two and three family residential real property. . . .” For purposes of Article 19 “approved assessing units,” the “homestead class” includes “all one, two and three family residential real property . . . (RPTL, § 1901(13)(a)). Similarly, the small claims assessment review procedure (RPTL, Art. 7, title 1-A) is generally applicable to one, two and three family {1} owner-occupied structures used exclusively for residential purposes (RPTL, § 730(1)(b)).
While these similar terms do not specifically define “residential” property for purposes of section 467 or 458-a, they do provide some insight into the Legislature’s intent in using that term in the statutes. Accordingly, in our opinion, when the senior citizens and alternative veterans exemptions were enacted, four or more family properties were entirely ineligible for those exemptions.
Subsequently, chapter 899 of the Laws of 1985 amended the exclusive residential use requirement of section 458-a(1)(d) to provide that, “in the event any portion of such property is not so used exclusively for residential purposes but is used for other purposes, such portion shall be subject to taxation and the remaining portion only shall be entitled to the exemption provided by this section.” Section 467(3)(c) was similarly amended by chapter 440 of the Laws of 1985. Based on these amendments, if a portion of a property is used for non-residential purposes, the alternative veterans or senior citizens exemption may be granted to the residential portion. Clearly, this amendment was intended for situations involving large acreage or mixed-use properties (see 10 Op.Counsel SBRPS No. 9). We do not read these amendments as affecting the exemption on property which was already deemed residential, that is, one, two and three family residences (see, N.Y.S. Assessor’s Manual, Vol.4, Sec. 4.01, p.9.33 (1/1/98)).
Accordingly, it has been and remains our opinion that up to (and including) a three family residence may be considered exclusively used for residential purposes, and where the owner of such property qualifies for either an alternative veterans exemption or a senior citizens exemption, both of which are limited to residential property, the exemption may be granted to the entire structure. Where a structure houses more than three families, we believe that only the applicant’s residential unit may qualify for the exemption.
June 8, 1998
{1} The Court of Appeals found no violation of equal protection of law guarantees in the exclusion of four (or more) family residences from the purview of small claims review (Town of Tonawanda v. Ayler, 68 N.Y.2d 836, 500 N.E.2d 869, 508 N.Y.S.2d 171 (1986)).
