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Volume 12 - Opinions of Counsel SBRPS No. 11

Opinions of Counsel index

Senior citizens exemption (income requirement) (Economic Stimulus Act of 2008) - Real Property Tax Law § 467:

The proceeds of a payment received under the Economic Stimulus Act of 2008 should not be considered as income for purposes of section 467 of the Real Property Tax Law.

We have been asked whether the amount of a payment received by a senior citizen under the Economic Stimulus Act of 2008 (Pub L 110-185; 122 US Stat 613) should be considered as income in determining eligibility for the senior citizens exemption (Real Property Tax Law, § 467). We think not.

It is true that the definition of “income” in section 467 (3) (a) is quite inclusive:

Such income shall include social security and retirement benefits, interest, dividends, total gain from the sale or exchange of a capital asset which may be offset by a loss from the sale or exchange of a capital asset in the same income tax year, net rental income, salary or earnings, and net income from self-employment, but shall not include a return of capital, gifts, inheritances, payments made to individuals because of their status as victims of Nazi persecution, as defined in P.L. 103-286 or monies earned through employment in the federal foster grandparent program and any such income shall be offset by all medical and prescription drug expenses actually paid which were not reimbursed or paid for by insurance, if the governing board of a municipality, after a public hearing, adopts a local law, ordinance or resolution providing therefor. The provisions of this paragraph notwithstanding, such income shall not include veterans disability compensation, as defined in Title 38 of the United States Code provided the governing board of such municipality, after public hearing, adopts a local law, ordinance or resolution providing therefor. In computing net rental income and net income from self-employment no depreciation deduction shall be allowed for the exhaustion, wear and tear of real or personal property held for the production of income[.]

Nevertheless, not all moneys received by an applicant for such exemption are to be considered as income. A refund or rebate of tax liability does not appear to fit within the income definition. Since one’s tax liability does not affect one’s income eligibility for the exemption, it would seem necessarily to follow that a reduction in that tax liability would also not affect such eligibility.

We note as well that the stimulus checks are apparently not considered income for purposes of the federal income tax. While federal income tax provisions are not dispositive in determining what is income for purposes of section 467 of the RPTL (Engle v. Talarico, 33 NY2d 237, 306 NE2d 796, 351 NYS2d 677 (1973)), this does not mean that such provisions must be ignored (10 Op.Counsel SBRPS No. 31; 11 id. No. 111). The following Questions and Answers appear on the Internal Revenue Service’s website:

Q. Is my stimulus payment taxable?

A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment.

Q. If my stimulus payment is not going to affect my 2008 tax refund or increase the tax I owe next year, why is it I need to retain the letter that lists how much I received?

A. In the event you do not qualify for the full amount on your 2007 return but you do on your 2008 return, you will need to have the letter as a record of the amount you previously received.

Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?

A. No, the stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return.

Similarly, in our opinion, the proceeds of a check received under the Economic Stimulus Act of 2008 should not be considered as income for purposes of section 467 of the RPTL.

October 8, 2008

Updated: