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Volume 4 - Opinions of Counsel SBEA No. 120

Opinions of Counsel index

Veterans’ exemption (purchase) (improvements and repairs) (conveyance to veteran after expenditure of eligible funds) - Real Property Tax Law, § 458:

The payment for capital improvements with eligible funds constitutes a “purchase” within the meaning of section 458 of the Real Property Tax Law, but the payment for the normal maintenance (repairs) of the property does not.

Where a veteran uses his eligible funds in improving real property belonging to another, and he later obtains title to such property, the assessor may grant an exemption if he is satisfied that the improvements were paid for in consideration for an eventual conveyance of the parcel.

We have received an inquiry regarding the veterans’ exemption from real property taxation (Real Property Tax Law, § 458). It is stated that a married veteran lived with and supported his in-laws, using his eligible funds in improving their real property. When his father-in-law died, title to the property passed to the veteran’s mother-in-law. She thereafter conveyed the property to the veteran and his wife. The question is if the veteran is entitled to an exemption based on the use of his eligible funds in improving the real property now owned by him.

Section 458 of the Real Property Tax Law provides that property owned by a veteran or certain other persons designated by the statute may be entitled to an exemption to the extent (not to exceed $5,000) that certain designated moneys (“eligible funds”) were used in the “purchase” of the property.

It is the opinion of this office that capital improvements (those investments in property which increase its market value) should be considered a “purchase” for purposes of section 458. However, normal maintenance (expenditures required to maintain property at its current value level) should not be considered a “purchase”. (See, 3 Op.Counsel SBEA No. 28 regarding improvements and repairs.)

In this case, the veteran used his eligible funds before he obtained title to the property. It is our opinion that if the assessor is satisfied that the veteran expended his eligible funds in consideration for the eventual conveyance of the property to him, he would qualify for an exemption. However, if the improvement to the property was in the nature of a gift, the veteran cannot be said to have purchased the property with eligible funds as is required by statute. In the latter case, he would not qualify for the veterans’ exemption.

May 19, 1975