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Volume 2 - Opinions of Counsel SBEA No. 101

Opinions of Counsel index

Veterans’ exemption - (member of exempt class) (divorce or separation of wife) - Real Property Tax Law, § 458:

The wife of a veteran is a member of the exempt class and is entitled to an exemption so long as she retains that status. After a separation decree, a wife retains her status, and generally the exemption should continue. In the case where the estranged wife purchases the property from her husband for cash consideration, she then loses the exemption, and the proceeds from the sale held by the husband become eligible funds. After the entry of a divorce decree, the woman, no longer being the wife of a veteran, loses the exemption.

We have received an inquiry from an assessor concerning the veterans’ exemption. It seems that real property was owned by a veteran husband and his wife. The property had previously qualified for a veterans’ exemption pursuant to section 458 of the Real Property Tax Law. The veteran husband has vacated the property and he has been served with process in an action for separation or divorce. However, the action has not been consummated, although the veteran husband has transferred the property in question to his wife. The question is whether the veterans’ exemption should be removed from the tax roll by reason of the above mentioned transfer or whether the separation or divorce action must be finalized before the exemption may be removed.

In order to qualify for a veterans’ exemption, it must be established that the subject property is owned by a member of the exempt class and that eligible funds were used in the purchase of such property. The wife of a veteran is a member of the exempt class, and since the property was purchased with eligible funds, the exemption should be continued as long as she retains her status as his wife. Even if the separation action were consummated, she would remain the wife of the veteran, and would continue to qualify for this exemption. However, if the parties are divorced, upon entry of the divorce decree, she would no longer be the wife of the veteran, and the exemption should be removed from the tax troll.

          However, in the case of the separation action, if the wife purchased the property from her husband, she would not be entitled to a continuance of this exemption with regard to this property, and if the husband used the proceeds of such sale to purchase other real property, he would be entitled to claim such proceeds as eligible funds for veteran exemption purposes. The real property transfer stamps attached to the deed will indicate whether any cash consideration was paid by the wife for the transfer in question. If there were no cash consideration paid by the wife for this transfer, and the transaction was merely a part of a settlement agreement between the parties, she would continue to be eligible for this exemption until such time as the parties are legally divorced.

It appears that the former assessors previously removed an exemption under similar circumstances solely on the basis of the real property transfer report and payment of the taxes by the wife. If the parties were not divorced, and if the wife paid no actual cash consideration for the transfer, the present assessor should notify the property owner that she is eligible for this exemption and it should be restored to the assessment roll. She would not, however, be entitled to any refund for taxes paid since the removal of the exemption. If the parties were divorced, or if the wife paid an actual cash consideration for the transfer, the action of the former assessors was proper.

June 7, 1972