Assessor's Manual - Volume 4

TABLE OF CONTENTS

THE ALTERNATIVE VETERANS EXEMPTION

• Local Authorization for the Alternative Veterans Exemption
• Maximum Levels of Exemption
• Eligibility for Exemption
• Period of War
• Ownership Requirements
• Residential and Occupancy Requirements
• Options for Veterans -- "Grandfather" Provisions
• Switching to the Alternative Veterans Exemption
• Moving to a New Property
• Applying for the Exemption
• Annual Determination of the Maximum Exempt Amount for Each Portion of the Alternative Veterans Exemption

• Appendix A. Sample Separation from Service Form,
  V.A. Statement of a Service-Connected Disability Rating, and Form RP-458-a-Dis
• Appendix B. Sample Applications and Separation from Service Forms
• Appendix C. Exemption Codes for the Veterans Exemption

THE ALTERNATIVE VETERANS EXEMPTION

In 1984, the Legislature amended the Real Property Tax Law (RPTL) and enacted a new alternative veterans exemption, §458-a (L.1984, c.525). Unlike the longstanding veterans exemption provided by RPTL §458 (the so-called "eligible funds" exemption), the alternative veterans exemption is not contingent upon the purchase of real property with specified government monies. Instead, the alternative veterans exemption is based on a percentage of assessed value subject to maximum levels of exemption. The alternative exemption is limited to the primary residence of a veteran and is available to property owned by honorably discharged veterans (or certain of their family members) who served during specified periods of war or under certain other conditions.

Like the eligible funds exemption, the alternative veterans exemption is applicable to county, city, town and village taxes but not to school taxes or special district levies. In general, a qualifying wartime veteran's property receives an exemption of 15% of its assessed value. An additional 10% exemption is available where the veteran can document service in a combat theatre or zone.

There is also a third exemption for veterans who received a service-connected disability compensation rating from the Veterans Administration or the Department of Defense. The percentage for this exemption is equal to one-half of the veteran's disability rating. (Wherea veteran died in the service of a service-connected disability, the veteran is considered to have been assigned a disability rating of 100%.)

Local Authorization for the Alternative Veterans Exemption

When the alternative veterans exemption was first enacted, each county, city, town and village had the choice of whether to grant it. If the municipality decided not to grant the exemption, a local law "opting out" of the alternative exemption must have been passed within given time limits. Any municipality, however, which initially opted by local law not to grant the alternative veterans exemption, may reverse its decision by repealing its local law.

In municipalities granting the alternative veterans exemption, eligible funds exemptions existing before adoption of the alternative exemption could continue, but no new eligible funds exemptions could be granted, except in the following case. In 1994 a new §458(5) was enacted authorizing, at local option, a "change in level" adjustment to eligible funds exemptions. If a taxing jurisdiction granting alternative veterans exemptions opted to allow "change in level" exemptions, it could also allow veterans who had previously had eligible funds exemptions but who later switched to the alternative veterans exemption to switch back to the eligible funds exemption. For details, see the Exemption Profile for RPTL §458.

Lastly, taxing jurisdictions granting the alternative veterans exemption may additionally adopt a local law 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.

Maximum Levels of Exemption

Each county, city, town and village granting the alternative veterans exemption may use the maximum set of exemption limits for the three categories of exemptions or pass a local law to use either of two lower or several higher sets of exemption limits. Local laws to use either of the two lower or eight (or fourteen, in the case of a "high-appreciation municipality") higher sets can be passed at any time.

The exemption limit sets are:

In "high appreciation municipalities" (defined below) the governing board may adopt still higher maximum limits of:

A "high-appreciation municipality" means: (1) New York City, (2) a county for which the State Board of Real Property Services has established a sales price differential factor for purposes of the school tax relief [STAR] exemption (Real Property Tax Law, sec. 425) for three consecutive years, or (3) a city, town, or village located within such a county. The State Board maintains a list of such counties on its website at: www.orps.state.ny.us/star/star_diff.htm

The maximum amounts must be multiplied by the latest final equalization rate or special equalization rate (if the equalization rate is 100 or less) for the assessing unit in order to arrive at the appropriate maximum exemption for each assessment roll. New maximum exemptions must be computed annually. The maximum exempt amounts can change from year to year if there is a change in the equalization rate. The annual determination of the maximum exemption is discussed in more detail in a later section of this guide.

Eligibility for Exemption.

The alternative veterans exemption is available to qualifying residential real property owned by honorably discharged veterans (or certain family members) who served during defined periods of war or under certain other conditions. The following sections discuss the criteria for eligibility for exemption. Reference is made, where appropriate, to the application form for the exemption (RP-458-a).

Period of War.

The basic 15% alternative veterans exemption is granted to property owned by veterans (or, as discussed below, certain family members) based on the veteran's active duty during one of the following periods of war:

In the case of a veteran who served with the United States military forces in Russia, the ending period is 4/1/20.

The Spanish-American War period also includes the Philippine Insurrection and Boxer Rebellion; in the case of a veteran who served in the United States military forces engaged in hostilities in the Moro Province, the ending date is July 15, 1903.

To qualify for the exemption, at least part of the veteran's service must fall within one of the above defined periods of war. Generally, reservists who engaged only in active duty for training or who were activated for only short periods of time are not eligible for the alternative exemption. However, reservists who were activated during a period of war and who performed significant, full-time active duty may qualify (8 Op.Counsel SBEA No. 37) (Question No. 5 on application form).

Also eligible for exemption are veterans who were awarded either an Armed Forces Expeditionary Medal, a Navy and Marine Corps Expeditionary Medal, or a Global War on Terrorism Expeditionary Medal and who were discharged or released under honorable conditions (see above list of qualifying medals).

Certain veterans who served as crew members in the U.S. Merchant Marine during World War II are eligible to receive the alternative veterans exemption. To qualify for exemption the person 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 Naval Transportation Service; (2) served satisfactorily as a crew member during WW 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 ocean going 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.

**Derived from Section 101 of Title 38 of the United States Code

Qualifying members of the American Field Service who served during World War II are also eligible for the alternative veterans exemption. To be eligible for exemption, the applicant 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.

Certain individuals who served with Pan American World Airways' during World War II may be granted the alternative veterans exemption. Persons receiving the exemption will have (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 (2) been discharged or released therefrom under honorable conditions.

Members of the reserve components of the U.S. armed forces who received an honorable discharge or release therefrom under honorable conditions, but are still members of the reserve components may be granted the alternative veterans exemption provided that such members meet all other qualifications for receiving the exemption.

To be eligible for exemption, the veteran must also have been discharged or released from service under honorable conditions. The veteran must attach proof to the application form verifying the dates and character of service (Question Nos. 5, 6). The additional proof necessary to justify approval of the combat zone (Question No. 7) and/or the disability portion (Question No. 8) of the alternative exemption is discussed in a later section of this guide.

Ownership Requirements

To be eligible for exemption, the property must be owned by the veteran, the spouse of the veteran, the unremarried surviving spouse of the veteran, or, if allowed by local option, a Gold Star Parent (defined as the parent of a child who died in the line of duty while serving in the United States Armed Forces during a period of war). (The fact that title to the property is in a veteran's spouse's name will not render a property ineligible to receive the exemption.) The ownership requirement is also satisfied if the veteran, the veteran's spouse, the veteran's unremarried surviving spouse or the Gold Star Parent is the legal life tenant of the property. 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. If both the husband and wife are deceased, the exemption can be granted or continued for the veteran's dependent father, mother, or child(ren) under 21 years of age who have legally received the property and who use it as their primary residence. The property must also have been the primary residence of a qualified owner prior to his or her death. If the owner is a veteran and is also the unremarried surviving spouse of a veteran, the veteran may also receive any exemption to which the deceased spouse was entitled.

Proof of ownership must be submitted with the application. Generally, the deed to the property for which exemption is sought will be the best proof of ownership. However, 3   Op.Counsel SBEA No. 52, which applies to the senior citizens exemption, concludes that a person in possession of property and holding an executory contract of sale to the parcel has "ownership" of the parcel and is entitled to receive that exemption. Similarly, a veteran holding this type of executory contract of sale will also qualify as an "owner" for purposes of the alternative veterans exemption.

A mortgage can also be used as proof of ownership. Make sure that the mortgage is for the property for which the exemption is being sought and that the owner(s) name(s) on the application form correspond to the mortgagor's name.

If the cooperative apartment provisions of RPTL §458-a(6) are allowed by local option, the apartment must be held in a cooperative form of ownership by a veteran who is a tenant/stockholder and resident of the apartment and satisfies all other conditions 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.

Residential and Occupancy Requirements

To be eligible for exemption, the property must be the primary residence of the veteran the unremarried surviving spouse of the veteran, or, if allowed by local option, a Gold Star Parent unless that person is absent from the property due to medical reasons or institutionalization (Question No. 9).

In discussing what is a "legal residence" for purposes of the senior citizens exemption, we stated, "which dwelling is his legal residence depends upon such facts as where he votes, the length of time spent in each place, the nature and amount of personal property in each place, and other conduct and behavior evidencing which he considers to be his permanent home"  (2 Op.Counsel SBEA No. 57). We believe that similar criteria should be applied in determining "primary residence" for purposes of §458-a. It is clear, however, that unlike the eligible funds veterans exemption (RPTL §458(1)), the alternative veterans exemption can only be granted to the primary residence of the veteran, and, if the veteran does not reside on the property, no exemption may be granted unless his absence is due to hospitalization or institutionalization. It is also clear that the "primary residence" issue needs to be determined on a case-by-case basis.

The property for which the exemption is sought must also be used exclusively for residential purposes. However, if a portion of the property is not used exclusively for residential purposes, the alternative veterans exemption can still be granted, but only to the residential portion of the property (Question No. 10). Where only a portion of the parcel is used exclusively for residential purposes, the exemption may be granted by distributing or apportioning the assessed valuation of the property between the residential (exempt) and nonresidential (taxable) portions and applying the exemption to the assessed valuation attributable to only the residential portion. Thus, the alternative exemption may be granted with or without separately assessing the residential portion or classifying the roll.

You will find that exclusive residential use normally means that the parcel has a property class code of 210 (single family), 220 (two family), 230 (three family), or 270 (mobile home). It could also include a portion of an agricultural property coded in the 100 series. Where rolls are classified in accordance with Article 19 of the RPTL as to the homestead class and non-homestead class, entries coded to the homestead class will meet the "exclusively used for residential purposes" requirement. The residential portion, if any, of non-homestead property may also qualify for exemption. Similarly, for special assessing units under Article 18 of the RPTL (New York City and Nassau County), the properties included in Class 1 should satisfy the "exclusively used for residential purposes" test. Condominiums in Class 2 will have to be reviewed on a case-by-case basis.

Options for Veterans -- "Grandfather" Provisions

A qualified veteran receiving the eligible funds exemption may continue to receive that exemption notwithstanding the decision of his or her municipality to grant the alternative exemption. A veteran retaining the eligible funds exemption may still, at any time, apply for an increase in the amount of that exemption to the statutory $5,000 maximum provided he or she uses additional eligible funds to purchase his or her real property.

If a veteran who received the eligible funds exemption moves, the veteran may stilltransfer that exemption, provided that the proceeds of sale of the former exempt property areused to purchase replacement property, even if the replacement property is located in a jurisdiction granting the alternative exemption.

Switching to the Alternative Veterans Exemption

In a municipality granting the alternative veterans exemption, a qualified veteran receiving an eligible funds exemption may elect to switch to the alternative exemption. To receive the alternative veterans exemption, however, the veteran must generally terminate all of his or her eligible funds exemption(s) (i.e., statewide). For example, where the alternative exemption is being granted by both the town (or city) and the county, a veteran may not receive the eligible funds (or pro rata) veterans exemption for one tax purpose (e.g., town taxes) and an alternative exemption for another (e.g., county taxes). If, however, the town opted out of the alternative exemption but the county did not, the veteran may retain the eligible funds exemption for town purposes and receive the alternative exemption for county purposes(8 Op.Counsel SBEA No. 12) (Question No. 12).

If the veteran switches to the alternative veterans exemption, the veteran cannot reverse the action unless (1) the veteran moves to a municipality that does not grant the alternative exemption and the veteran uses the proceeds of property sale to purchase the replacement property or (2) switching back to the eligible funds exemption is allowed by the local law adopting "change in level" adjustment to such exemptions (described in the Exemption Profile for RPTL §458.)

Moving to a New Property

A veteran who moves and purchases another residence in the same assessing unit or in another assessing unit granting the alternative veterans exemption can continue to receive the alternative exemption upon timely application. If the new municipality is not granting the alternative exemption, the veteran can switch back to the eligible funds exemption if the veteran previously had that exemption.

A veteran, spouse of a veteran, or unremarried surviving spouse of the veteran who moves and purchases another residence in the same assessing unit may transfer the alternative veterans' exemption to the replacement property if allowed by local option. Such an owner need not resubmit RP-458-a to receive the prorated benefit, however, to continue receiving the exemption on the replacement residence beyond the fiscal year in question, the owner must resubmit RP-458-a.

The veteran who moves from one municipality to another should attach a copy of the previous exemption application or other proof of a prior exemption with the RP-458-a being submitted to you. If the veteran is unable to obtain a copy of the previous application, you are encouraged to contact the assessor in the prior municipality to verify the previous exemption.

Applying for the Exemption

A veteran (or other qualified owner) seeking the alternative veterans exemption must file a completed application form (RP-458-a) with the assessor on or before taxable status date. Veterans initially filing for the alternative exemption as well as those veterans receiving an eligible funds exemption who want to switch to the alternative exemption must use this form. A copy of Form RP-458-a and instructions can be found at the end of the exemption profile.

The owner(s) of the residential property is (are) the person(s) who must complete and sign the form. If more than one veteran is making application for a single property, separate applications need to be provided. An example of this is where both the husband and wife are veterans.

One of the most important parts of the application is the written evidence that needs to be attached to the application. An application submitted without the required written evidence does not provide sufficient documentation to justify approval of the exemption.

For the basic 15 percent exemption for "active service during a period of war," the owner needs to provide, at a minimum, the following:

1. A completed application form.
2. A copy of the deed to the property or other proof of ownership.
3. A copy of the separation from service form such as the DD214 or other written evidence to prove dates of service and type of discharge or release.

A veteran who is also requesting the additional 10 percent exemption for service in a combat zone or combat theatre must submit proof of the award of a United States campaign medal or ribbon documenting such service (Question No. 7).

The New York State Division of Veterans' Affairs has provided the following list of awards which, when included on separation of service forms, document service in a "combat theatre or combat zone." These medals were awarded to all qualifying veterans in all branches of the Armed Forces and are on the separation papers of such veterans. The qualifying awards for these war periods are:

In addition to the medals specified above, a veteran who has received either an Armed Forces Expeditionary Medal, a Navy Expeditionary Medal, a Marine Corps Expeditionary Medal, or a Global War on Terrorism Expeditionary Medal is entitled to the additional combat zone exemption. The State Division of Veterans' Affairs has provided the following list of medals which, when included on separation of service forms, document receipt of an Armed Forces Expeditionary Medal, a Navy Expeditionary Medal, or a Marine Corps Expeditionary Medal. As of July 9, 2007, the qualifying medals are:

Not all recipients of the World War II American Campaign Medal are eligible for the additional exemption for service in a combat zone or theatre. For a veteran to qualify for additional exemption based upon the receipt of the American Campaign Medal, the medal must have been awarded under one of the following conditions:

1. On permanent assignment outside the continental limits.
2. Permanently assigned as a member of a crew of a vessel sailing ocean waters for 30 consecutive days or 60 nonconsecutive days.
3. Outside the continental limits in a passenger status or on temporary duty for 30 consecutive days or 60 nonconsecutive days.
4. Awarded combat decoration or certificate when recipient actually participated in active combat against the enemy.

A veteran, therefore, who received the American Campaign Medal solely for service within the continental limits of the United States for an aggregate period of one year will not qualify for the additional exemption. Accordingly, to determine if a particular recipient of the American Campaign Medal qualifies for the additional exemption, it is necessary to examine the veteran's DD214 or other separation form to determine the basis for the award.

Veterans who served in the U.S. Merchant Marine during World War II are eligible to receive the alternative exemption. These veterans received awards different from those issued to veterans in the Armed Forces. The State Division of Veterans' Affairs has advised us that awards that document a World War II merchant mariner's service in a combat theatre or combat zone are:

Atlantic War Zone Bar
Pacific War Zone Bar
Mediterranean-Middle East War Zone Bar
Marine Combat Bar

Philippine Defense Ribbon
Philippine Liberation Ribbon
Mariner's Medal
Distinguished Service Medal
Meritorious Service Medal

These awards, however, do not prove service in a combat zone in and of themselves. Documentation will be necessary to show that the recognized service occurred in a combat zone.

Certain members of the American Field Service and flight crew and aviation ground support units of Pan American World Airways are also eligible to receive the alternative veterans exemption. However, The Division of Veterans' Affairs has informed us that these service members did not receive any awards different from those issued to veterans in the United States Armed Forces.

A sample separation form is included in Appendix A. Others, with completed applications, are in Appendix B. You will find that not all separation forms are the same and abbreviations are frequently used. The type of form will generally depend on when the veteran was separated from active duty. The sample form in Appendix A is from the Vietnam War period. The dates of active service from this sample Vietnam War period form are:

A review of this form, assuming all other criteria are met, should result in the approval of this person's residential property receiving the 15% war period exemption and the additional 10% combat zone exemption.

For veterans who claim a service-connected disability exemption, written evidence from the Veterans Administration or from the Department of Defense showing the disability rating percentage must be provided. Ratings are in even increments of 10 percentage points from 10 to 100 percent. Included in Appendix A is a sample statement on Veterans Administration letterhead stating that a veteran has a service-connected disability rating. This sample was provided by the New York State Division of Veterans' Affairs.

If the veteran is deceased, the last rating is the permanent rating. Also, the Veterans Administration or the Department of Defense disability form may indicate that it is a permanent rating. If not a permanent rating, and the disability rating has increased or decreased since the last exemption was granted, the disability rating must be recertified by filing renewal form RP-458-a-Dis.

It is possible that a veteran serving during a period of war may have received the disability outside a combat zone. Such a veteran would be eligible for the disability exemption.

A veteran has the option of refilling Form RP-458-a for the alternative veteran's exemption if changes have occurred that affect qualifications for an increased or decreased amount of exemption, other than changes in disability ratings.

Annual Determination of the Maximum Exempt Amount for Each Portion of the Alternative Veterans Exemption.

Annually the maximum exempt amounts need to be recomputed. Such amounts may be the same or different for your city/town and county.

The maximum exempt amounts are determined by multiplying the latest final State equalization rate, defined below, times the chosen limit. The seventeen sets of chosen limits are described on Page 9.23. Every time you receive a new final equalization rate you must recompute the maximum exempt amounts and adjust exemptions on parcels impacted by the new maximum amounts.

If your final State equalization rate is 100 or greater, you do not have to go through this process because the statute says that you must use as the maximum amount the lesser of the chosen limit or the equalized limit.

If you use the RPS (Real Property System), the system will do all the work after the RPSV4 reference table has been updated with the new final rate. If you are using a process other than RPS, you will have to check with the appropriate people to determine your procedures.

The following Examples A and B show how maximum exempt amounts are determined.

County Maximum Exempt Amounts

Town Maximum Exempt Amounts

The following Examples C and D show how the exemption on three properties is determined and illustrate how the maximum exempt amounts get involved.

Example C: Three properties with maximum amounts from Example A.

War Veteran - Non-Combat	$ 3,000
War Veteran - Combat	$ 2,000
Disability	$10,000

Three Sample Residential Properties

Example D: Three Properties with Maximum Amounts from Example B.

The maximum exempt amounts from Example B are:

	County Maximum	Town Maximum
War Veteran - Non-Combat	$ 9,750	$ 4,875
War Veteran - Combat	6,500	3,250
Disability	32,500	16,250

Three Sample Residential Properties

Appendix A

Appendix B

Appendix C

Exemption Codes for the Veterans Exemption

1. = Exempt from county and municipal taxes.
2. = Exempt from county taxes.
3. = Exempt from municipal taxes.

In all cases you are to use the appropriate exemption code(s) in processing any veterans exemption.

If you are using the RPS module of the New York State Real Property Information System, refer to user documentation for instructions in transferring the data to the RPS system.

You will notice that the exemption codes have been established so that a veteran who was both on active duty during a war period and in a combat zone would have a single exemption code of 4113  ; it is associated with a 25% (15% + 10%) exemption percentage.

Where a veteran has been approved for exemption because of a service-connected disability you will always need to use two exemption codes:

Where the county and city or town are using different maximum limits, exemption codes for each purpose are to be used because for each purpose it is possible for a parcel to have different exempt amounts.

Other cases where more than one exemption code for a parcel will be required are:

1. Two veterans on one parcel.
2. Eligible funds exemption for one taxing purpose with alternative exemption for another taxing purpose.

Please send general questions or comments to Jerome McCall.