Volume 5 - Opinions of Counsel SBEA No. 35
Veterans’ exemption (generally) (transfer of exemption) - Real Property Tax Law, § 458:
A veterans’ exemption (Real Property Tax Law, §4 58) may be transferred from parcel A to parcel B: (1) if the veteran sells A and uses the proceeds of sale therefrom in the purchase of B; or (2) if the veteran enjoys an exemption on parcel A and uses additional eligible funds to purchase B, he may request termination of his exemption on A and apply for an exemption on B.
We have received an inquiry requesting our opinion concerning the partial real property tax exemption available to veterans (Real Property Tax Law, § 458). It is stated that a veteran owns a home in County A on which he enjoys a $5,000 veterans’ exemption. He also owns a cottage in County B on which there is no outstanding mortgage. The question is, if the veteran should sell his home in County A, can he transfer the $5,000 exemption to his County B property? The cottage is presently assessed for $2,500, so we are also asked how much of an exemption (if any) the veteran may receive in County B.
Section 458 provides that property owned by a veteran or certain other persons designated by the statute may be entitled to an exemption to the extent (not to exceed $5,000) that certain designated moneys (“eligible funds”) were used in the “purchase” of the property.
Since the veteran is currently receiving the maximum amount of exemption to which he is entitled, he may not presently receive any exemption on his cottage in County B. There are two methods by which a veterans’ exemption may be transferred from one parcel to another.
The first of these is where the veteran sells his presently exempt parcel and uses the proceeds of sale received from such transaction in the purchase of another parcel of property. We have previously stated that “Proceeds from the sale of veterans’ exempt real property used to purchase other real property are ‘eligible funds’” (1 Op.Counsel SBEA No. 25). In the factual situation herein presented, there is a question as to whether or not the application of the proceeds of sale of the veteran’s presently exempt County A property toward the County B cottage will constitute a purchase within the meaning of section 458. We have previously stated that:
To be eligible for an exemption pursuant to this section [458], a veteran must apply his eligible funds toward the actual purchase or improvement of his property, or toward the satisfaction of an assumed mortgage, purchase money mortgage, or home improvement mortgage . . . (4 Op.Counsel SBEA No. 29).
Since it is stated that the veteran has no existing mortgage on his cottage, he will be allowed to receive an exemption on such property only if he applies his eligible funds toward the costs of improving it.
The second method by which a veteran may transfer his exemption results from the fact that such exemption is limited to $5,000. It is to be noted that we have previously indicated that the exemption is not limited to the veteran’s residence, and that he may claim a partial exemption on real property in a number of towns, providing that his total exemption does not exceed $5,000 (1 Op.Counsel SBEA No. 35). Although the veterans’ exemption is limited to $5,000, the veteran may very well receive more than $5,000 in eligible funds. If a veteran uses $5,000 in eligible funds to purchase parcel A and receives a maximum exemption thereon, and then uses an additional $5,000 in eligible funds to purchase parcel B, he would be unable to receive an exemption on the latter parcel unless the exemption on parcel A is discontinued. Thus, the veteran may request that his exemption on parcel A be cancelled, and apply for an exemption on parcel B by filing an application with the assessor of the town in which parcel B is located on or before taxable status date.
A veteran’s exemption may not exceed his assessment. Thus, if he invests $5,000 in eligible funds into property which is later assessed for $3,000, he will receive a $3,000 veterans’ exemption. Thereafter, if his assessment is raised, he may apply for an increased exemption, showing that eligible funds in excess of $3,000 have been used in the purchase of his property. Likewise, he may wish to invest only $3,000 of his eligible funds and retain the balance for a future “purchase.”
September 24, 1975