Assessor Manuals, Exemption Administration: RPTL Section 458

Exemption Administration Manual—Part 1: Residential—Other than multiple dwellings

Section 4.01, RPTL Section 458: Veterans (based on eligible funds or disability)

Year originally enacted:

Before 1896¹

Related statutes:

RPTL  §458-a

Summary:

Real property owned by a veteran of the United States Armed Services or, under certain conditions, the merchant marine service, the American Field Service or a civilian flight crew and aviation ground support employee of Pan American World Airways may be eligible for one of the exemptions authorized by RPTL  458 or the alternative exemption for period of war veterans allowed subject to local option by RPTL 458-a (see the Exemption Profile for that statute). Once a taxing jurisdiction has opted to allow the alternative veterans exemption, in general, it may not grant any new exemptions under  458(1) or former  458(5). However, under certain circumstances, a veteran who once had an eligible funds exemption but later switched to an alternative veterans exemption may switch back to the eligible funds exemption (see Summary, 458(5)(current).   An eligible veteran in a school district that has adopted the alternative veterans exemption, but not the eligible funds exemption may apply for and receive the alternative exemption solely for school purposes, and still continue to receive the eligible funds exemption for county, city, town and/or village purposes. 

RPTL 458 contains three different exemptions: 458 (1), (2), and (3), plus two provisions under 458(5), one of which was repealed in 1994, that allow the 458(1) or 458(2) exemption to be adjusted when all property in the assessing unit has been revalued. A summary of each of these subdivisions follows.

458(1):

Real property owned by a veteran (or a qualifying family member) that was purchased with proceeds from certain forms of government compensation known as eligible funds is exempt from general municipal taxes and school taxes, if the school district has adopted a resolution, to the extent that such funds were actually used in purchasing the property. Such property is subject to special ad valorem levies, and special assessments. This exemption is limited to $7,500 of assessed valuation. (For definitions of purchase and eligible funds see Ownership Requirements below.)

458(2):

Real property that (1) is owned by a veteran of World War I or II or the Korean Conflict who sustained permanent disability while on military duty (or a qualifying family member) and was either honorably discharged or released from service or received a letter from the NYS Department of Veterans’ Services (DVS) stating that the veteran now meets the character of discharge criteria for all of the benefits and services listed in the Restoration of Honor Act  and (2) was purchased with moneys collected by popular subscription is exempt from general municipal and school district taxes to the extent that these moneys were actually used to purchase the property. Such property is, however, liable for special ad valorem levies and special assessments. This exemption must not exceed $5,000 of assessed valuation.

458(3):

The primary residence (including necessary land) of a seriously disabled veteran is wholly exempt from taxation, special ad valorem levies, and special assessments, provided that the veteran is either eligible for or has received financial assistance from the United States Government to equip the residence with special facilities to accommodate the veteran's disability. The same exemption is allowed for such a residence owned by the unremarried surviving spouse of such a veteran. Additionally, such unremarried surviving spouse is entitled to transfer the exemption to any new housing unit used as his or her primary residence.

458(5) (former "pro rata"):

Repealed in 1994, this subdivision authorized tax districts that had a full-value revaluation to adopt a local law, on or before October 31, 1985, to increase or decrease each existing 458(1) or 458(2) veterans exemption in proportion to the change in assessed value of the veteran's property resulting from the revaluation. Any such pro rata exemptions in effect prior to this subdivision's repeal remain in effect until the local law allowing them is repealed, at which time the taxing jurisdiction has the option of adopting the change in level exemption authorized by 458(5) enacted in 1994.

458(5) (current "change in level"):

Effective July 20, 1994, upon adoption of a local law, a taxing jurisdiction is authorized to increase or decrease each existing 458(1) or 458(2) veterans exemption in proportion to the change in level of all assessments resulting from a revaluation or update. Such increase or decrease is to be computed as described under Calculation of Exemption below.

Each taxing jurisdiction that adopts a local law allowing change in level exemptions may also allow property owners previously receiving an exemption under §458 but later opting to receive exemption under §458-a to switch back to receiving the §458 exemption. If this provision is included in the local law allowing change in level exemptions, a property owner who wishes to switch back to the §458 exemption must file a §458 application (Form RP-458) within one year of the adoption of the local law.

Eligibility requirements

Ownership requirements:

458(1): Property purchased with eligible funds

• The property must be owned by a veteran (or by his or her spouse, unremarried surviving spouse, dependent father or mother, or children under twenty-one years of age) and must have been purchased with eligible funds granted by the United States or by this state.² The following types of transactions are considered to constitute purchase of real property where eligible funds are used: (1) payment of purchase price with a government check for eligible funds,(2) payment of purchase.
• Exemption may also be granted to a veteran who (1) served overseas as a flight crew and aviation ground support employee of Pan American World Airways or one of its subsidiaries or affiliates as a result of Pan American's contract with Air Transport Command or Naval Air Transport Service during World War II (December 14, 1941 to August 14, 1945), and was either (a)  honorably discharged or released from service or (b) received a letter from the NYS Department of Veterans’ Services (DVS) stating that the veteran now meets the character of discharge criteria for all of the benefits and services listed in the Restoration of Honor Act,  (2) payment of purchase price directly with the proceeds of the check for eligible funds, (3) payment on the principal of a mortgage assumed at the time of the purchase, (4) payment of the cost of a purchase money mortgage, (5) payment of the principal of a mortgage where the mortgage money was borrowed to improve the property, (6) payment of the cost of improvements (improvements increase the value of property whereas repairs do not), (7) payment on the principal of a mortgage on real property owned by any person in the exempt class (that is, anyone who would be eligible for exemption under RPTL 458), and (8) acquisition of the title to real property because of default of the mortgagor where the assignment of the mortgage to the veteran has been paid for with eligible funds.
• The following does not constitute purchase of real property: payment of current or delinquent taxes, interest, insurance premiums, or cost of repairs on property, even if made with money borrowed on a mortgage (and even though the mortgage is paid off with eligible funds).
• The following types of payments constitute eligible funds: (1) monthly payments for either a service-connected or a non-service-connected disability or death, (2) retirement pay or disability retirement pay, (3) severance pay or disability severance pay, (4) a death gratuity or benefit equal to six months' pay, (5) proceeds of World War adjusted service bonus and interest (Bonus, World War I), (6) mustering out pay, (7) lump sum payment to Army or Navy Air Corps Reserve officer upon release from active duty, (8) lump sum readjustment allowance paid to member of reserve component on involuntary release, (9) readjustment allowance, (10) subsistence allowance under the 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), (11) the 4% payment made by the government for the first year on the guaranteed portion of a GI loan on real property when used to reduce the principal of the mortgage (not to exceed $160), (12) the proceeds on maturity or death or the cash value on actual surrender of U.S. Government Life Insurance and National Service Life Insurance, (13) dividends or refunds on insurance granted by the U.S., (14) the amount of money equal to the amount of eligible funds retained by the U.S. Government for insurance premiums, (15) proceeds from the sale of real property entitled to exemption used to purchase another parcel of real property or exchange of such real property to the extent of eligible funds used in the original purchase, (16) bonus granted by New York State or the U.S. Government, (17) annuity to blind veterans granted by New York State, 18) Fleet Reserve Retainer Pay (Navy and Marine Corps), and (19) prisoner of war pay.³
• The following types of payments do not constitute eligible funds:(1) government retainer pay, (2) government bounty or soldier's pay, (3) government allotment of soldier's pay, (4) National Guard drill pay, (5) loan on War Risk Insurance Policies or National Service Life Insurance Policies, (6) ordinary wages paid for military service, (7) additional pay granted for special service, such as submariner or paratrooper pay, (8) dependents' allowance (World War II), (9) proceeds of a loan not secured by a mortgage used to purchase real property even though loan is paid off with eligible funds, (10) enlistment allowance, (11) reenlistment bonus, (12) terminal leave pay (officer), (13) leave settled and compensated for (for enlisted man, commonly called terminal leave pay) or proceeds of bonus therefore, or (14) bonus granted by another state.
• The veteran may mingle eligible funds with other funds; however, to obtain exemption the veteran must prove to the satisfaction of the assessor(s) that eligible funds were used to purchase real property.
• If the property applying for exemption is a cooperative apartment, certain local option provisions may be allowed by RPTL 458(8), (see B. Local Options, below).
• For purposes of this veterans' exemption, if the title to real property is held by a trustee or trustees, the property is eligible for a property tax exemption if the trustees or trust beneficiaries are otherwise qualified.

458(2): Disabled veteran, property purchased through donations

• The property must be owned by a veteran of World War I or II or the Korean Conflict who sustained permanent disability while on military duty (or by the spouse, unremarried surviving spouse, or dependent father or mother of such a veteran) and who either  (1) has been honorably discharged or released from service or (b) received a letter from the NYS Department of Veterans’ Services (DVS) stating that the veteran now meets the character of discharge criteria for all of the benefits and services listed in the Restoration of Honor Act .  The property must have been purchased with moneys collected by popular subscription (that is, moneys donated by the community) in recognition of the extraordinary services rendered by the veteran.
• If the property applying for exemption is a cooperative apartment, certain local option provisions may be allowed by RPTL 458(8), (see B. Local Options, below).
• For purposes of this veterans' exemption, if the title to real property is held by a trustee or trustees, the property is eligible for a property tax exemption if the trustees or trust beneficiaries are otherwise qualified.

458(3): Seriously disabled veteran

• The property must be owned by a seriously disabled veteran (or by the veteran and his or her spouse, or the unremarried surviving spouse of the veteran) who is either eligible or who has received financial assistance from the United States Government to equip the residence with special facilities necessary to accommodate the veteran's disability (typically, this type of assistance is distributed by the Veterans Administration in the form of a grant under what is now Section 2101 (a) of Title 38 of the U.S. Code to assist veterans who have suffered permanent service connected disability).
• If the property applying for exemption is a cooperative apartment, certain local option provisions may be allowed by RPTL 458(8), (see B. Local Options, below).
• For purposes of this veterans' exemption, if the title to real property is held by a trustee or trustees, the property is eligible for a property tax exemption if the trustees or trust beneficiaries are otherwise qualified.
• An unremarried surviving spouse of a veteran previously exempt under this statute may transfer the exemption to any housing unit which is used as his or her primary residence.

458(5): Former pro rata or current change in level

Since this subdivision is an extension of the exemption authorized by 458(1) or 458(2), the property must be owned by one of the qualifying owners described in section 1a or 1b above.

Property location requirements:

458(1), (2), (3):

None.

458(5) (former pro rata or current change in level): 

The property must be located in a taxing jurisdiction that has a local law in effect that allows one or the other of these exemptions.

Property use requirements:

458(1), (2):

None, unless the cooperative apartment provisions of RPTL  458(8) are allowed by local option. In which case, the veteran tenant/stockholder must be a resident of the apartment.

458(3):

The property must be used as the primary residence of the seriously disabled veteran; if such veteran has received a grant for specially adapted housing from the U.S. Department of Veterans Affairs, such property must be specially equipped with fixtures made necessary by the nature of the veteran's disability. To determine if the property is the veteran's primary residence, facts such as the length of time spent on the property, where the veteran votes, and the nature and amount of personal property on the premises should be considered. The sole use requirement for an unremarried surviving spouse of a veteran previously exempt under this statute is that the property must be such spouse's primary residence.

458(5) (former "pro rata" or current "change in level"):

None, unless the cooperative apartment provisions of RPTL 458(8) are allowed by local option. In which case, the veteran tenant/stockholder must be a resident of the apartment.

Certification by state or local government:

None required.

Required construction start date or other time requirement: 

None.

Local option

458(1):

Each school district, or city, in the case of a city with a population of one million or more, may adopt a resolution, local law, or ordinance, after a public hearing, to allow the exemption for school purposes.

458(1), (2), (3):

Each municipality may adopt a local law, ordinance or resolution to allow that portion of a cooperative apartment corporation held by an otherwise eligible veteran tenant/stockholder to be eligible for an exemption from real property taxes. If allowed, the amount of the exemption must be determined by the assessor, based upon the proportion of the outstanding stock held by the eligible shareholder, and credited against the taxes charged to the corporation. Eligible stockholders would receive an adjustment to their monthly maintenance fees by the cooperative apartment corporation to reflect the benefit of the exemption. However, this exemption may not be granted to apartments subject to the provisions of Private Housing Finance Law Articles 2, 4, 5, or 11.

In addition, each municipality may adopt a local law, ordinance or resolution allowing a transferred prorated exemption to a veteran, spouse of a veteran or unremarried surviving spouse of a veteran who sells his or her property on which he or she has been receiving an exemption under  458, and who purchases a replacement property within the same county or in the case of NYC, a city.

458(5) (former "pro rata"):

Yes - Provided that it had adopted a local law or ordinance on or before October 31, 1985, each county, city, town, and village was authorized to pro rate veterans exemptions granted under 458(1) or 458(2). If such a tax district failed to adopt the local law by that date, it cannot now legally grant pro rata exemptions.

If the tax district adopted the local law in time and was granting pro rata exemptions when the new change in level exemption became effective, it may repeal the pro rata local law and in its place may adopt a law allowing the change in level exemption (see below).

In addition, each county, city, town, and village may adopt a local law or ordinance to allow that portion of a cooperative apartment corporation held by an otherwise eligible veteran tenant/ stockholder to be eligible for an exemption from real property taxes. If allowed, the amount of the exemption must be determined by the assessor, based upon the proportion of the outstanding stock held by the eligible shareholder, and credited against the taxes charged to the corporation. Eligible stockholders would receive an adjustment to their monthly maintenance fees by the cooperative apartment corporation to reflect the benefit of the exemption. However, this exemption may not be granted to apartments subject to the provisions of Private Housing Finance Law Articles 2, 4, 5, or 11.

In addition, each municipality may adopt a local law, ordinance or resolution allowing a transferred prorated exemption to a veteran, spouse of a veteran or unremarried surviving spouse of a veteran who sells his or her property on which he or she has been receiving an exemption under 458, and who purchases a replacement property within the same county or in the case of NYC, a city.

458(5) (current "change in level"):

Yes - Each county, city, town, and village may adopt a local law or ordinance allowing the adjustment of veterans exemptions under 458(1) or 458(2) in proportion to the change in level of assessments resulting from a revaluation or update. Furthermore, each such tax district that grants alternative veterans exemptions under 458-a may include in that local law or ordinance a provision allowing veterans who had previously had eligible funds exemptions under 458 but who had switched to the alternative veterans exemption under 458-a to switch back to the eligible funds exemption, thereby allowing such veterans to qualify for change in level exemptions.

A municipality may not allow both the pro rata and the change in level options for its taxing purposes.

For change in level of assessment rolls filed on or after January 1, 1998, each taxing jurisdiction may adopt a local law or ordinance allowing for recompute exemptions. In this case, if additional eligible funds are received and applied to the purchase of the property (for example, by reducing the principal of a mortgage or making improvements to the property), the existing veteran's exemption would be adjusted to reflect the increase in eligible funds multiplied by the change in level from the assessment roll in the year the exemption was originally granted.

In addition, each county, city, town, and village may adopt a local law or ordinance to allow that portion of a cooperative apartment corporation held by an otherwise eligible veteran tenant/ stockholder to be eligible for an exemption from real property taxes. If allowed, the amount of the exemption must be determined by the assessor, based upon the proportion of the outstanding stock held by the eligible shareholder, and credited against the taxes charged to the corporation. Eligible stockholders would receive an adjustment to their monthly maintenance fees by the cooperative apartment corporation to reflect the benefit of the exemption. However, this exemption may not be granted to apartments subject to the provisions of Private Housing Finance Law Articles 2, 4, 5, or 11.

Lastly,  each municipality may adopt a local law, ordinance or resolution allowing a transferred prorated exemption to a veteran, spouse of a veteran or unremarried surviving spouse of a veteran who sells his or her property on which he or she has been receiving an exemption under 458, and who purchases a replacement property within the same county or in the case of NYC, a city.

Limitation on exemption

*if allowed by local option

**If allowed by local option, tax districts may adopt the cooperative apartment provisions of RPTL 458(8).

 * If allowed by local option, tax districts may adopt the cooperative apartment provisions of RPTL  458(8).

 * If allowed by local option, tax districts may adopt the cooperative apartment provisions of RPTL  458(8).

 *If allowed by local option

**If allowed by local option, tax districts may adopt the cooperative apartment provisions of RPTL  458(8).

 *Or cumulative change in level, as appropriate (see Calculation of exemption)

**If allowed by local option

***If allowed by local option, tax districts may adopt the cooperative apartment provisions of RPTL  458(8).

Payments in lieu of taxes

None required.

Calculation of exemption

General municipal and school district taxes:

458(1):

This exemption is allowed for general municipal taxes only and is calculated by determining the amount of eligible funds applied to purchase of the property; the exemption must not exceed $7,500 of assessed valuation unless the property is owned by more than one veteran, in which case the exemption must not exceed $7,500 of assessed value for each owning veteran. A veteran who is also the unremarried surviving spouse of a veteran may also receive any exemption to which the deceased spouse was entitled. The amount of exemption is to be rounded to the nearest fifty dollars (if there is no nearest increment then the exemption should be rounded to the next highest fifty dollars). If additional eligible funds are received and applied to purchase of the property (for example, by reducing the principal of a mortgage or making improvements to the property), another application may be submitted to increase the amount of the exemption up to the maximum.

If the cooperative apartment provisions of RPTL 458(8) are allowed by local option, the calculation for the eligible tenant/shareholders of the Cooperative Apartment Corporation is as follows:

Exemption = Assessed Value x (n/N)
where n = number of shares owned by eligible veteran
N = total number of corporation shares

However, no single exemption can exceed $7,500 of assessed value.

458(2):

This exemption applies to both general municipal and school district taxes and is calculated by determining the amount of moneys raised by popular subscription and applied to purchase of the property; the exemption must not exceed $5,000 of assessed valuation.

If the cooperative apartment provisions of RPTL 458(8) are allowed by local option, the calculation for the eligible tenant/shareholders of the Cooperative Apartment Corporation is as follows:

Exemption = Assessed Value x (n/N)
where n = number of shares owned by eligible veterans
N = total number of corporation shares

458(3):

This exemption applies to both general municipal and school district taxes and is equal to 100% of the assessed valuation of the residence and necessary land.

458(5) (former "pro rata"):

The pro rata exemption is determined by the ratio of the individual veterans exemption to the property's assessed value on the last pre-revaluation assessment roll. The pro rata increased/decreased exemption should be in an amount that preserves the pre-revaluation ratio.

458(5) (current "change in level"):

If the total assessed value of the veteran's property receiving the exemption increases or decreases as a result of a revaluation or update of assessment and if a material change in level of assessment (i.e., an annual change of less than 0.98 or more than 1.02) is certified for the assessment roll by the Office of Real Property Tax Services (ORPTS), the veteran's eligible funds should be increased or decreased according to that change in level. If the assessor receives the certification after completion, verification, and filing of the assessment roll, the assessor must certify the amount of the exemption as recalculated to the local officials having custody and control of the roll, and such officials must enter the recalculated exemption on the roll.

If the taxing jurisdiction has adopted the provision allowing veterans to switch back from an alternate veteran's exemption to the eligible funds exemption, the eligible funds of all veterans should be recomputed using a cumulative change in level factor certified by ORPTS. The cumulative change in level is measured from the assessment roll immediately preceding the assessment roll on which exemption was first granted under  458-a; provided, however, that if an exemption under 458 was initially granted to a parcel on a later assessment roll, the cumulative change in level factor to be used in recomputing the exemption should be measured from the assessment roll immediately preceding the assessment roll on which that exemption was initially granted. No refunds or retroactive entitlements are allowed.

Because cumulative change in level factors are required only for the year in which veterans switch back, the State Board will certify cumulative factors only if requested by the municipality or taxing jurisdiction.

Lastly, if the provisions for allowing recomputed exemptions have been enacted, the existing veteran's exemption must be adjusted to reflect the increase in eligible funds multiplied by the change in level from the assessment roll in the year the exemption was originally granted.

458(1), (2), (3), (5):

The transferred prorated exemption applies to general municipal taxes if the property previously received exemption in accordance with 458(1) or 458(5), and to both general municipal and school taxes if the property previously received the exemption authorized by 458(2) or 458(3). Proration of the exemption on the replacement property is based on the date during the fiscal year the veteran obtains title to the new property, and is calculated by multiplying the tax rate or rates for each municipality that has levied taxes for that fiscal year times the exempt amount on the former property, then times the fraction of each fiscal year remaining following the date the replacement property is acquired.

Special ad valorem levies and special assessments:

No exemption allowed, except where 458(3) applies. In that instance, the exemption is 100% of the assessed value of the residence and necessary land.

Assessment roll sections

Taxable (RPS Section 1).

Filing requirements (owner or occupant of property)

458(1), (3):

File form RP-458 - Application for Veterans Exemption from Real Property Taxation (see sample form and instructions following Exemption Profile)

458(2):

Although an application form for this exemption does not exist, a verified statement must be submitted to the assessor(s) by or on behalf of the veteran on grievance day. The statement must contain the facts on which the exemption is claimed, including the amount of moneys raised by popular subscription and applied to purchase of the property.

458(5) (former "pro rata"):

None.

458(5) (current "change in level"):

None, except where a veteran is seeking to reobtain a previously granted eligible funds exemption that will be subject to a local change in level of assessment. In that case, the veteran must file Form RP-458.

Reporting requirements (assessor)

None.

Exemption application forms

• Form RP-458 
• RP-458-Ins

Note: For further information, see Alternative Veterans Exemption Assessor Guide and the following Exemption Profile for RPTL  458-a.

A pamphlet entitled Publication 1093, Veterans' Exemption Questions & Answers, is available for the general public.

¹1946 - Subdivision 2 added.
   1950 - Subdivision 3 added.
   1979 - Subdivision 5 added.
   1994 - Subdivision 5 repealed.
   New subdivision 5 enacted. 2006 - Subdivision 9 added.

²The definition of veteran includes (1) certain crew members of the merchant marine, (2) certain members of the American Field Service, and (3) certain flight crew and aviation ground support employees of Pan American World Airways all of whom served during World War II.

To qualify for exemption merchant mariners must have (1) been employed by the War Shipping Administration or Office of Defense Transportation or their agents as a merchant seaman as documented by the U.S. Coast Guard or Department of Commerce or as a civil servant employed by the U.S. Army Transport Service or the National Transportation Service; (2) served satisfactorily as a crew member during World War II (December 7, 1941 to August 15, 1945) aboard (a) a merchant vessel in oceangoing (foreign, intercoastal, or coastwise) voyages or "near foreign" voyages between the U.S. and Canada, Mexico, or the West Indies via ocean routes or (b) a public vessel in oceangoing service or foreign waters; and (3) received a Certificate of Release or Discharge from Active Duty and a discharge certificate, or an Honorable Service Certificate/Report of Casualty from the Department of Defense.

An American Field Service member applying for exemption must have (1) been employed by the American Field Service, (2) served overseas under U.S. Armies and U.S. Army Groups in World War II (December 7, 1941 to May 8, 1945), and (3) been discharged or released therefrom under honorable conditions.

³ In the case of a subsistence allowance under the GI Bill of Rights, exemption is limited (a)to the reasonable rental value to the veteran of the necessary dwelling premises which he purchased with the subsistence allowance during the 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 the property was purchased with a subsistence allowance after payment was 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 an 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 to be a subsistence allowance and is treated in the manner described in this note (see 3 Op. Counsel SBEA No. 6).

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