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Volume 3 - Opinions of Counsel SBEA No. 98

Opinions of Counsel index

Aged exemption (income requirement) (dividends) - Real Property Tax Law, § 467:

Gross dividends are income for purposes of this section. The federal income tax rule allowing a portion of dividends to be excluded from income for federal income tax purposes is not controlling.

We have received an inquiry regarding the so-called aged exemption (Real Property Tax Law, § 467). The question is whether gross dividends should be treated as income of an applicant for purposes of section 467.

Section 467 authorizes a granting municipality, at its option, to set an income limit between $3,000 and $6,000 for the income tax year immediately preceding the date of making application for exemption. This section further provides (in subdivision 3(a)) that “[s]uch income shall include social security and retirement benefits, interest, dividends, net rental income, salary or earnings, and net income from self-employment, but shall not include gifts or inheritances” (emphasis added). The specific question is whether the applicant may exclude as income for purposes of section 467 that portion of a dividend qualifying for exclusion under federal income tax laws. The language just cited clearly indicates that the ordinary income tax rules do not apply when computing income for purposes of section 467.

The Court of Appeals came to the same conclusion in a recent case, Engle v. Talarico, 33 N.Y.2d 237, 306 N.E.2d 796, 351 N.Y.S.2d 677. There the Court stated (at p. 679) that “[t]he Legislature expressed no intention of incorporating the federal or state tax rules into the exemption statute. Absent direction to the contrary, the term ‘income’ as used in the particular statute, must be judicially construed.”

Therefore all gross income, with the two specific statutory exceptions of net rental income and net income from self-employment, is includable as “income” for purposes of section 467. Thus, gross dividends should be considered as income of an applicant for purposes of this exemption.

May 23, 1974

NOTE: Construes law prior to L.1992, c.145, which allowed the income of only one spouse to be considered under certain circumstances. Note also that the maximum income limitation has been repeatedly increased since this Opinion was issued.