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Volume 4 - Opinions of Counsel SBEA No. 115

Opinions of Counsel index

Aged exemption (residence and occupancy requirement) (apartments leased by owner) - Real Property Tax Law, § 467:

Section 467 of the Real Property Tax Law is silent as to whether or not the aged exemption may be allowed on one property where there are three or more family residences. Denial of the exemption on a four or more family residence would appear to be consistent with the intent of the statute.

Our opinion has been requested as to whether the partial real property tax exemption for the aged authorized by section 467 of the Real Property Tax Law may be allowed on a house with five apartments where an otherwise qualified applicant resides in one apartment and rents the other four. It is stated that the building produces a gross rental income of $4,200.

Section 467 provides that the property for which an exemption is sought must be “used exclusively for residential purposes” and also provides that an exemption may be allowed on property which “is the legal residence of and is occupied in whole or in part by the owner or by all of the owners of the property” (emphasis supplied). Also, the statute requires that the income of an otherwise qualified property owner must be within the limit set by the municipality granting the exemption.

Therefore, a person meeting all the other qualifications of section 467 with respect to income, age and ownership would qualify for exemption even though a portion of the real property is leased for residential purposes provided that the real property is his legal residence and is occupied by him at least in part. However, where the leasing reaches the scale of a hotel business, or where the property consists of a large apartment house, which is in effect a commercial enterprise, it is readily apparent that no exemption may be allowed.

By providing that the exemption is to apply to residential property of an otherwise qualified person “occupied in whole or in part by the owner”, the Legislature clearly intended that the exemption apply to a one or two family residence. It should be noted that the Legislature could have provided that there be an apportionment in the event that a portion of the property had been leased for residential purposes but it chose not to do so (e.g., see, Real Property Tax Law, § 421(2), which provides that a portion of real property leased for nonexempt purposes by a nonprofit corporation is fully taxable, while the remainder of the property is entitled to exempt status).

Section 467 is silent as to whether the exemption may be denied on a three or more family residence. There are no court decisions on this point. Therefore, whether the exemption is to be allowed on a three or more family residence is a determination which will have to be made by the assessor after examining each case on its own facts. In many cases, of course, the income derived therefrom will preclude an otherwise qualified owner from obtaining this exemption. Where an applicant meets the income limitation, we have been informed that in some jurisdictions the exemption has been allowed on a three family residence, and denied on a four or more family residence. Such determination is consistent with the intent of the statute and in the event the matter is litigated we feel the courts would uphold the determination.

April 1, 1975