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Volume 10 - Opinions of Counsel SBRPS No. 97

Opinions of Counsel index

Veterans exemption; alternative veterans exemption (ownership) (limited liability company) - Limited Liability Company Law, § 202; Real Property Tax Law, §§ 458, 458-a:

Real property owned by a limited liability company is not eligible for an eligible funds or alternative veterans exemption.

We have been asked whether real property, the title to which is in a limited liability company (LLC), may receive either an eligible funds veterans exemption (Real Property Tax Law, § 458) or an alternative veterans exemptions (RPTL, § 458-a). Under current law, we think not.

To receive either veterans exemption, the property for which exemption is sought must be in one or more of the natural persons listed in the statute, such as the veteran or the spouse of the veteran (RPTL, §§ 458(1)(1), 458-a(1)(c)). Here, ownership is in the LLC (per Limited Liability Company Law, § 202(b); see also, 16 NY Jur2d, Business Relationships, § 2018).

We have previously expressed the opinion that property owned by a corporation does not qualify for the eligible funds exemption even if all the shares thereof are owned by the veteran or some other owner who could receive the exemption if he or she had title to the property (1 Op.Counsel SBEA No. 76). We reached a similar conclusion as to partnerships where title was in the partnership name (1 Op.Counsel SBEA No. 54). Given the similarity of the ownership requirements, we reach the same conclusions as to the alternative exemption.

An LLC, which first became permissible in New York State on October 24, 1994 (when L.1994, c.576 became effective), appears to be a hybrid between the corporate and partnership structures. As has been said, “The Limited Liability Company (LLC), if properly formed, combines the limited liability feature available to the shareholders of a corporation or to the limited partners of a limited liability company with the pass-through income taxation available to the partners of a general or limited partnership” (16 NY Jur2d, Business Relationships, § 1995). Accordingly, given our prior conclusions as to the ineligibility of corporations or partnerships for veterans exemptions, in our opinion, property owned by an LLC does not qualify for either the eligible funds or alternative veterans exemption.

We note that, in chapter 104 of the Laws of 1999, the Legislature extended the real property tax exemption for certain low income housing accommodations in New York City (RPTL, § 420-c) to LLCs. Obviously, it could hereafter similarly amend other exemption statutes, such as the veterans exemptions.

January 26, 2000