Assessor Manuals, Volume 4, Exemption administration, Part 1, Section 1

Assessor Manuals: Table of Contents: Exemption Administration, Part 1

Introduction

Section 1

This volume of the Assessor's Manual describes the legal and administrative requirements that must be considered in granting or denying each of the real property tax exemptions authorized by New York State law. It is designed to be a manual that the assessor can use to determine:

1. whether a property owner claiming eligibility for an exemption is in fact entitled to that exemption, and
2. if so, how the exemption should be handled on the assessment roll.

The manual is not intended to be a substitute for the law. If, after using the manual and obtaining information from the applicant, the assessor is still unsure about the applicant's eligibility for exemption, the assessor should seek advice from the Director of Real Property Tax Services in his county or from the NYS Department of Taxation & Finance -- Office of Real Property Tax Services. For the most part, however, the manual should provide sufficient guidelines for establishing exemption eligibility.

There are three basic parts to the manual: (1) a Subject Index and an Exemption Code Index, (2) a Summary Chart of Exemptions, and (3) a set of Exemption Profiles.

This is an alphabetical index of key words that describe the types of owners and property that may qualify for exemption. For each main entry, the applicable law sections are listed and the Exemption Profiles that should be referred to are identified by section and page number. In addition to the main entries, synonyms and cross references are given.

The Subject Index is probably the best place to start when the assessor is unsure of which exemption may apply to a property. Where appropriate, main entries include a list of exemptions that, at least on the surface, appear to be similar. For example, under the entry Business are listed over 20 types of exemptions available for commercial and industrial property. A quick scanning of the list should enable the assessor to narrow down the number of possible exemptions. From the Subject Index the assessor should proceed to the Exemption Profiles, where eligibility requirements are described in detail.

This index lists in numerical order all current 5-digit exemption codes established by the State Office of Real Property Tax Services. For each code the applicable law section and Exemption Profile are given. Assessors may find this index useful in checking on whether a code assigned to a parcel is the one that accurately identifies the exemption granted to that parcel.

The summary chart shows the extent to which each exemption applies to municipal taxes and special district charges, indicates whether the exemption is subject to local option on the part of taxing jurisdictions, shows whether the exemption statute contains specific property use requirements, and gives the section and page number of the Exemption Profile to be consulted for further information. Abbreviations used are explained in a legend at the top of the chart.

Exemptions are listed in law reference order, beginning with the Real Property Tax Law, continuing alphabetically with other consolidated laws, and ending with unconsolidated laws, federal statutes, and international agreements.

Most of this manual is made up of Exemption Profiles, which are summaries of the provisions of exemption statutes. There are over 200 profiles organized into eight groups according to property type or owner, as follows:

• 4.01  Residential - Other Than Multiple Dwellings
• 4.02  New York State Government
• 4.03  Municipal Governments
• 4.04  U.S., Foreign Governments and Interstate Agencies
• 4.05  Private Community Service and Social Organizations
• 4.06  Industrial, Commercial, and Public Service
• 4.07  Multiple Dwellings and Urban Renewal
• 4.08  Agricultural and Forest

Within each group the profiles are presented in law reference order, with the Real Property Tax Law exemptions given first. Where appropriate, such as in the case of the exemption for senior citizens, the profile is followed by application forms. Where they are available, instruction booklets are provided following the forms.

Gaps have intentionally been left in the numbering of profiles to allow for future additions. For instance, in Section 4.02 (New York State Government) the first profile, RPTL Section 402, is numbered 41.01 - 41.02 and the second profile, RPTL Section 404(1), is numbered 43.01 - 43.06. If sometime in the future a Section 403 of the RPTL were enacted creating a new type of exemption for state property, the profile for that new section would begin with page number 42.01.

In addition to Exemption Profiles, special summary charts are provided for Section 4.07, Multiple Dwellings and Urban Renewal, since this section contains a large number of similar exemptions. Charts are also used within profiles for exemption statutes whose provisions cannot be effectively presented within the framework of a standard profile.

Each profile includes the following sections.

Entered here are one or more 5-digit exemption codes that are to be used to identify the exempt parcel on the assessment roll. Further information on the use of the codes is given in a later section of the profile, Coding of Exemption on Assessment Roll.

An exemption code is given only where the exemption applies to general municipal and/or school district taxes. If the property is taxable for municipal and school purposes and is exempt only from one or more types of special district charges (as is the case with state-owned lands governed by Real Property Tax Law  532), no exemption code is to be entered on the assessment roll. To indicate such property's limited exemption from special district charges, the assessor should devise some other method for flagging the parcels affected.

This section shows the year in which the exemption statute was first enacted into law. In some profiles a footnote also appears, giving the years of important amendments to the original statute.

State laws that have an effect on the statute discussed in the profile are identified here. The relevant provisions of these laws have been incorporated into the profile.

The related statute most frequently cited is Section 490 of the Real Property Tax Law, which for many exemptions specifies the extent to which the property is liable for special district charges. Applicable provisions of Section 490 are incorporated into the profile sections Limitations on Exemption and Calculation of Exemption.

The summary describes the most important features of the exemption, such as:

1. Which types of owners and property are eligible for exemption.
2. Which taxes and special district charges the exemption applies to.
3. Whether eligible property is wholly or partially exempt.
4. Whether the exemption is mandatory or optional for each taxing jurisdiction.

This section describes the requirements that must all be met before the exemption is granted.

These requirements vary greatly from exemption to exemption. In the case of some exemptions there are no ownership requirements; that is, there are no restrictions on the type of owner that qualifies for exemption. With other exemptions there are specific restrictions on ownership.

Among the ownership requirements that one will find described in Exemption Profiles are those having to do with the owner's occupation (for example, as a member of the clergy or a volunteer fireman), status as a veteran, status as a disabled person, age, personal income, status as a government unit or quasi-government entity (such as a public authority), or, if a private organization, the laws under which it is organized and the purposes and activities allowed by its articles of organization.

This section indicates whether the property must be located in a certain type of area in order to be eligible for exemption. An exemption may be restricted, for example, to property in cities, to municipalities having certain population limits, or to low-income areas within municipalities.

Most statutes restrict the purposes for which a property may be used. Among the property use requirements described in Exemption Profiles are: occupation of the property by its owner, use of the property for residential purposes, occupation of the property by persons or families within certain income limits, and use of the property for certain community service or business purposes. Some statutes have multiple property use requirements. Where this is the case, all of the use requirements must be satisfied for the property to qualify for tax exemption.

This section describes any documented approval that the applicant for exemption must obtain from a state or local government agency prior to application for exemption. For example, industrial waste treatment facilities must be approved by the state Department of Environmental Conservation for them to be eligible for exemption under Section 477 of the Real Property Tax Law.

The assessor should obtain a copy of the required approval from the applicant before he grants the exemption.

Such time requirements apply mainly to business property and multiple dwellings. When such requirements apply to an exemption, they are described in this section of the Exemption Profile.

This section describes the option, if any, available to each taxing jurisdiction to allow or disallow the exemption. As shown in the Summary Chart of Exemptions in Section 3.00 of this volume, there are basically three types of local option:

1. Local option to exempt, which must be exercised through adoption of a local law or resolution. An example of this type of option is the one allowed for the disabled in Section 459 of the Real Property Tax Law.
2. Local option to tax, which must be exercised through adoption of a local law or resolution. An example of this type of option is the one allowed for business investment property in Section 485-b of the Real Property Tax Law.
3. Agreement to exempt, which may or may not be a written agreement. An example of this type of option is the one allowed for certain types of municipal property located outside the municipality's boundaries in Real Property Tax Law Section 406(3).

Currently, local option exemptions make up about one-fourth of all exemptions. The most common type is the local option to exempt; the next most common is the agreement to exempt. The least common type is the local option to tax.

The taxing jurisdictions that allow the exemption, either by opting to exempt or by not opting to tax, should be indicated by the last digit of the exemption code assigned to the parcel, as follows:

Usually, once a local option has been exercised, it applies to all eligible property in the taxing jurisdiction. Sometimes, however, the statute allows the option to be exercised on a project-by-project, or otherwise restricted, basis. This distinction is pointed out, where appropriate, in the Exemption Profiles.

To be sure that an exemption being applied for by a property owner is in fact allowed by the taxing jurisdictions in his assessing unit, the assessor should obtain some documentation of local options exercised from each county, city, town, school district, and village in the assessing unit.

In this section one or more charts are presented. These show (1) to what extent the exemption is limited in amount or duration and (2) to which types of taxes and other charges the exemption applies.

The distinction between taxes and other charges must be kept in mind when applying an exemption to a property.

A "tax" is any ad valorem charge imposed on real property by or on behalf of a county, city, town, village, or school district for municipal or school district purposes. The term "tax" does not apply to special districts.

Special district charges are of two types:

A "special ad valorem levy" is a charge imposed on real property for a special district improvement or service to defray the cost of that improvement or service. Such a charge is imposed only on those properties benefited by the improvement or service, and it is imposed in the same manner (that is, according to the value of the property) and at the same time as taxes for municipal purposes. Only county special districts and town special districts may impose special ad valorem levies.

A "special assessment" is a charge imposed on benefited property in proportion to the benefit received by the property to defray the cost of a special district improvement or service or a special municipal improvement or service. Special assessments are usually imposed on an other than ad valorem basis, such as front footage of the property.

A statute providing an exemption from "taxation" does not necessarily exempt property from special ad valorem levies or special assessments, as shown below in the example sections of the Limitations on Exemption chart.

The following examples show sections of the Limitations on Exemption chart with the various entries that are possible.

Example 1: RPTL  420-a (Nonprofit Organizations - Mandatory Class)
Exemption amount not limited for any purposes:

Example 2: RPTL  479 (Fallout Shelters)
Exemption amount limited for all purposes:

* Amount of exemption is limited to the increase in assessed value attributable to the fallout shelter facility, but no exemption may exceed $100 times the number of occupants the facility is designed to accommodate in accordance with the plan, regulations, and orders of the State Civil Defense Commission.

Example 3: RPTL  467 (Senior Citizens)
Exemption amount limited to some purposes and exemption disallowed for other purposes:

Limitation on Duration of Exemption

Example 1: RPTL  420-a (Nonprofit Organizations - Mandatory Class)
Exemption amount not limited for any purposes:

Example 2: RPTL  487 (Solar/Wind Energy Systems)
Exemption amount limited to some purposes and exemption disallowed for other purposes:

This section of the Limitations on Exemption chart, which is divided into five subsections, shows to what extent the exemption is allowed in each type of taxing jurisdiction: (a) county or county special district, (b) city, (c) town or town special district, (d) village, or (e) school district. Since the format of chart entries is the same for all subsections, the examples given here are for only one type of taxing

Example 1: RPTL  400(1) (U.S. Government)
Exemption not limited in taxing jurisdiction:

Ex - Exempt        Tax - Taxable       NA - Not Applicable

Example 2: RPTL  420-a (Nonprofit Organizations - Mandatory Class)
Exemption limited in taxing jurisdiction:

Ex - Exempt        Tax - Taxable       NA - Not Applicable

L - Liability only for (1) county and town charges for capital costs of sewer systems, water supply systems, waterways and drainage improvements, and streets and highways, plus (2) special assessments for indebtedness contracted before 7/1/53.

Example 3. RPTL  467 (Senior Citizens)
Exemption limited in taxing jurisdiction and subject to local option:

Ex - Exempt        Tax - Taxable       NA - Not Applicable

* If allowed by local option.

It should be noted that the exemption limitations described in this manual are those specified in generally applicable state laws. In some instances, the state legislature has for individual municipalities enacted special laws that allow exceptions to the exemption provisions contained in general state laws. An example is the City Charter of the City of Kingston, which provides a broader exemption to municipal property acquired for nonpayment of taxes than that allowed by Real Property Tax Law  406(5). As stated in  406(5), such property generally is not exempt from school district taxes; according to the city charter, the exemption applies to all tax levies. Since the city charter became effective before the section of the Tax Law that was the predecessor of  406(5) and the provisions of the city charter were not intended to be superseded by that section of the Tax Law, the exemption for tax-sale property has been construed to apply to school district as well as general municipal taxes in the City of Kingston. It is likely that there are special laws that have been enacted for some other municipalities and that some of these may affect the provisions of one or more exemption statutes. The assessor should make sure that he is informed of such laws and the extent to which they apply to property in his assessing unit.

This section describes the type of payments in lieu of taxes required if such payments are required by state law. As noted in the Exemption Profiles, payments in lieu of taxes should not be entered on the tax roll, since they are not collected by the tax collector. Such payments are collected in the same manner as are other payments due the municipality under contract.

Mandatory payments in lieu of taxes currently apply to only the following exemptions, and, within these exemptions, may be limited to only certain property:

Real Property Tax Law  400(2) - U.S. Government (Property occupied under purchase contract authorized by Public Buildings Purchase Contract Act)

Real Property Tax Law  404(1) - State of New York (Generally)

Real Property Tax Law  404(2) - State of New York (State and Local Employees' Retirement System)

Real Property Tax Law  404(3) - State of New York (Teachers' Retirement System)

Real Property Tax Law  406(7) - Municipal Corporations (Airfields outside corporate limits served by three or more major passenger carriers)

Real Property Tax Law  412 & Public Authorities Law - Public Authorities (some authorities)

Real Property Tax Law  412-a & General Municipal Law  874 - Municipal Industrial Development Agencies

Real Property Tax Law  416 - United Nations and Similar International Organizations

Education Law  468 - New York City Educational Construction Fund

Education Law  492 - City of Yonkers Educational Construction Fund

Environmental Conservation Law  21-0701(14.3) - Delaware River Basin Compact

Environmental Conservation Law  21-1301(15.3) - Susquehanna River Basin Compact

General Municipal Law  696 - Urban Development Action Area Projects

Private Housing Finance Law  33(2) - Limited-Profit Housing Companies (Dwellings leased to New York State Housing Finance Agency)

Private Housing Finance Law  405 - Rent-Controlled Multiple Dwellings Improved through Loan Made Pursuant to Private Housing Finance Law Article 8

Retirement and Social Security Law  313(h) - State of New York (State and Local Police and Fire Retirement System)

McKinney's Unconsolidated Laws  6272 - New York State Urban Development Corporation (Industrial project or property of undetermined use)

This section gives the percentage of assessed value or other amount exempt for municipal, school, and special district purposes. If the amount changes over time, a schedule is given showing the amount exempt each year. Where the calculation can be complicated, sample calculations are given.

Frequently there are property owners that are entitled to more than one type of exemption. For example, the owner may qualify both as a limited-income senior citizen and as a veteran. Where multiple exemptions apply to a parcel, calculation of exempt value may cause some difficulty. Where both a fixed-dollar (e.g. veterans) exemption and a percentage (e.g. senior citizens) exemption apply to the property, the following procedure should be used.

1. Subtract all fixed-dollar exemption amounts from total assessed value.
2. Apply all percentages of exemption to the taxable value remaining after subtraction of fixed-dollar amounts.

The code or codes to be used to identify the exemption on the assessment roll are given here. This section also specifies the roll section in which the exemption should be entered. If alternative codes are possible, each code is described.

As explained above in the discussion of local option, the last digit of the exemption code shows which taxing jurisdictions allow an exemption that is subject to such option. The first digit of the code indicates the type of exemption and its extent, as follows:

1 - Public owner, exemption not limited by state law in amount, duration, or tax purpose from which the property is exempt.

2 - Private owner, exemption not limited by state law in amount, duration, or tax purpose.

3 - Public owner, exemption limited by state law in amount, duration, or tax purpose.

4 - Private owner, exemption limited by state law in amount, duration, or tax purpose.

This section describes the form or forms that the applicant for exemption must file with the assessor. The only forms included here are those prescribed by the NYS Department of Taxation & Finance -- State Board of Real Property Tax Services. If application forms are required, samples of these are given following the Exemption Profile. Where available, instruction booklets are provided following the forms.

It should be remembered that the burden of establishing eligibility for exemption is on the applicant. In those cases where an application form is required, the assessor should make sure that all questions on the form are answered completely and, where additional documentation is requested, that it has been supplied. Even when both of these requirements have been met, if the assessor feels that he needs more information to determine eligibility for exemption he should request it from the applicant. Where no application form has been prescribed by the state, the assessor should be no less careful to obtain sufficient information from the applicant. The Exemption Profiles given in this manual should provide guidance on what sorts of information might be requested of applicants.

Reporting by the assessor is required in very few cases. When reporting is required, the form to be used is described in this section. One of the exemption statutes that prescribes reporting by the assessor to the applicant for exemption is Real Property Tax Law Section 467, where the form RP-467-Dnl (Notice of Denial of Application for Partial Tax Exemption for Senior Citizens) must be sent to the applicant if he or she has failed to meet the eligibility requirements.

This section, which lists exemptions that are similar to the one discussed in the profile, is intended to assist the assessor in choosing the exemption, if any, that in all respects applies to the property in question. When in doubt about the suitability of the exemption described in the profile, the assessor should consult the profiles of similar exemptions to determine if another exemption statute would be more appropriately applied to the property.

In some cases, even after review of all possible exemption statutes, the assessor may find that both the exemption discussed in the profile and one of the similar exemptions appear to be applicable to a property. Such a situation is likely to occur in the case of property owned by government agencies. For example, exemption of property owned by the State of New York and its agencies is covered by several statutes. While most such property qualifies for exemption under a general law, Section 404(1) of the Real Property Tax Law, there are exceptions. For a number of New York State agencies, special exemption statutes have been enacted -- for some state public benefit corporations under the Public Authorities Law and for other such corporations (such as the NYS Housing Finance Agency) under a variety of other laws.

In deciding which exemption law applies to a property, the assessor should be guided by this generally accepted rule of statutory construction: where a special statute conflicts with a general statute relating to the same subject matter, the special statute controls. Thus, where there exists a special law exempting property of a particular state agency, that exemption law applies, not Section 404(1).

For the sake of brevity, in the Subject Index, the Exemption Code Index, and the Exemption Profiles the titles of laws are abbreviated, as follows:

*Name changed in 1987 to Economic Development Law.

Questions about the information contained in this manual on exemption administration should be addressed to the following offices of the NYS Department of Taxation & Finance -- Office of Real Property Tax Services:

Questions on use of the manual, eligibility requirements, and other matters not listed below

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