September 16, 2010
VETERANS' PROPERTY TAX EXEMPTIONS IN SELECT STATES
By: Veronica Rose, Chief Analyst
You asked for a description of property tax benefits, if any, available to veterans in Maine, Massachusetts, New Hampshire, New York, and Vermont.
All five states provide property tax benefits (i.e., credit or exemptions) to eligible veterans. (An exemption is a reduction in the appraised or assessed value of property before taxes are assessed. A credit is a reduction in the tax bill.) All of the states require that the veteran be a state resident to qualify for the benefit. Otherwise, there are variations in the programs, including the definition of veteran, nature of the qualifying service, factors determining the benefit level, and type of property to which the benefit applies (e.g., real or personal).
Maine provides exemptions primarily to (1) war service veterans who are at least age 62 or receiving some type of U.S. government payment for total disability (service or non-service) and (2) peacetime veterans receiving a U.S. government payment for total service-connected disability. The exemption is up to $7,000 for war veterans, who served during or before WW I, and up to $6,000 for other war and peacetime veterans, and it may be applied to real or personal property. The veteran must live in the state and occupy the property on which the claim is based.
Only veterans with disabilities qualify for veterans' property tax exemptions in Massachusetts. Exemptions range from $400 for a 10% qualifying disability to complete exemption for a totally disabled veteran who used federal funds to purchase specially adapted housing. Claimants must have lived in Massachusetts for at least six months before entering the armed forces or for five consecutive years before claiming an exemption. The exemption can be applied only to the veteran's primary residence.
New Hampshire requires towns to give veterans (or their qualified spouse or surviving spouse, where applicable) a standard property tax credit based on their service condition or disability. But towns may set higher credit limits, as designated in law. The credit is applied to the veteran's residential property or, in the case of the surviving spouse of a veteran who suffered a service-connected death, to any real property the spouse owns in the same municipality where he or she resides. The law also requires towns to exempt a veteran's specially adapted house from property tax if it was bought with assistance from the U.S. Department of Veterans Affairs (VA).
New York provides three different exemptions: a mandatory “eligible funds exemption” for veterans (or other designated persons) who buy property using “eligible funds” such as pension, bonus, or insurance payments; (2) an optional “Cold War exemption” for veterans of the Cold War; and (3) an optional “alternative exemption” for veterans who served during wartime or received an expeditionary medal. The alternative and Cold War exemptions can be applied only to residential properties. The eligible funds exemption can be applied to any type of real property.
Under Vermont law, veterans are eligible for a property tax exemption if they served during wartime or received an expeditionary medal and (1) have at least a 50% disability rating or (2) are getting some kind of federal pension or indemnity compensation from the VA or Military Department. The veteran's spouse, surviving spouse who does not remarry, or dependent child are also eligible. The exemption is up to $10,000, or up to $40,000 if a town votes to provide a higher exemption. It can be applied to real or personal property. The claimant must own and occupy the home that is the subject of the exemption.
Under Maine law (36 MRSA § 653), a veteran who served in war or was awarded an expeditionary medal is eligible for an exemption if he or she is at least age 62 or is receiving any U.S. government pension or compensation for total service- or non-service-connected disability. A peacetime veteran is eligible if he or she is receiving any federal pension or compensation for total disability because of a service-connected injury or disease. War veterans who served during or before WW I qualify for up to $7,000; other war veterans and peacetime veterans qualify for up to $6,000. A veteran's parents, minor child, and surviving spouse who does not remarry also qualify for these exemptions.
The exemption can be applied to real or personal property, including property held jointly with a spouse or in a revocable living trust for the veteran's benefit. The veteran must occupy the property on which the claim is based.
The law contains a separate exemption for paraplegic veterans who served during wartime or received an expeditionary medal. They are eligible for an exemption of up to $50,000 for specially adapted housing bought with a federal grant. Surviving spouses who do not remarry also qualify for this exemption.
To qualify for an exemption, the veteran must have:
1. served during a federally recognized war period;
2. served during August 24, 1982 to July 31, 1984 or December 20, 1989 to January 31, 1990;
3. been awarded an armed forces expeditionary medal;
4. served as a member of the American Merchant Marine between December 7, 1941 and August 15, 1945; or
5. become totally disabled during active service in the line of duty.
The law defines “federally recognized war periods” as:
1. WW I (April 6, 1917 to November 11, 1918 (to March 31, 1920 for service in Russia));
2. WW II (December 7, 1941 to December 31, 1946);
3. Korean Campaign (June 27, 1950 to January 31, 1955);
4. Vietnam War (February 28, 1961 to May 7, 1975 unless the veteran died in service or was discharged for a service-connected disability after that date); and
5. Persian Gulf War (August 2, 1990 to an end date set by the U.S. government).
More information on the program is available from the Maine Revenue Services website at Property Tax Exemption.
The law gives veterans (and, in most cases, surviving spouses who do not remarry) several types of property tax exemptions, ranging from $400 to total exemptions, based on the veteran's disability rating. The veteran must have lived in the state for at least six months before entering the service or for at least five consecutive years immediately before filing a claim for an exemption. And he or she must be a state resident occupying the property on which the claim is based on July 1 in the year he or she submits a claim.
The following people are eligible for a $400 exemption:
1. veterans with a 10% war service-connected disability;
2. Purple Heart recipients;
3. parents of veterans who died in wartime service (Gold Star parents); and
4. unmarried surviving spouses of veterans (M.G.L. c. 59, s.5, clause 22).
Exemptions for People with Service-Connected Injuries
Veterans are eligible for an exemption if they (1) were awarded a Medal of Honor or certain other medals or (2) have suffered a serious service-connected disability such as loss of their hands or feet or loss of sight in one or both eyes. The exemption is $750 or $1,250 depending on the severity of the injury. Surviving spouses qualify for the exemption even if they remarry (M.G.L. c. 59, s.5, clause 22A and M.G.L. c. 59, s.5, clause 22B).
Permanent and Totally Disabled Veterans with Special Housing
The law gives a $1,500 property tax exemption to veterans permanently and totally disabled as a result of a service-related injury and who received VA assistance to acquire specially adapted housing. The veteran's surviving spouse also qualifies for this exemption, regardless of whether he or she remarries (M.G.L. c. 59, s.5, clause 22C).
Surviving spouses of (1) veterans and National Guard members who died as a result of a combat zone injury or disease and (2) veterans missing in action and presumed dead are eligible for property tax exemptions, as long as they do not remarry.
The claimant is eligible for a complete exemption in the five years after the veteran's death. After that, he or she is eligible for an exemption of up to $2,500 (M.G.L. c. 59, s.5, clause 22D).
Veterans Incapable of Working
The law provides an exemption of up to $1,000 to veterans who have a 100% VA disability rating because of a war injury and cannot work. Surviving spouses also qualify for this exemption (M.G.L. c. 59, s.5, clause 22E).
The law provides a total property tax exemption to paraplegic veterans and their surviving spouses regardless of whether they remarry (M.G.L. c. 58, s.8A).
Credit for War Service and Service-Connected Death and Disability
The law provides a standard $50 credit to eligible veterans (or surviving spouses, where applicable). But towns may instead vote to offer a higher credit of up to $500 (N.H. Rev. Stat. Ann. § 72:28).
To be eligible for this credit, the veteran must be a state resident who served at least 90 days during wartime or was terminated from the armed forces because of a service-connected disability. The spouse or surviving spouse of an eligible war veteran and the surviving spouse of a veteran terminated for a service-connected disability or death are also eligible.
The credit for a veteran applies to the veteran's residential property; the credit for the surviving spouse of a veteran who suffered a service-connected death applies to any real property the surviving spouse owns in the municipality where he or she lives (N.H. Rev. Stat. Ann. 72:28).
Credit for Surviving Spouse of Veteran Killed While on Active Duty
The law provides a standard $700 tax credit to the surviving spouse of any veteran killed while on active military duty or in a combat zone. Alternatively, towns may vote to give a higher credit up to $2,000. The credit may be applied to real (residential or nonresidential) or personal property (N.H. Rev. Stat. Ann. § 72:29-a).
Credit for Service-Connected Total Disability and Specially Adapted Housing
A veteran who is totally and permanently disabled because of a service-connected injury qualifies for a $700 tax credit on his or her principal residence. Alternatively, towns may vote to provide a higher tax credit of up to $2,000 (N.H. Rev. Stat. Ann. § 72:35).
The law also exempts from taxation any specially adapted housing purchased with VA assistance by a veteran who is totally disabled as a result of a service-connected injury (N.H. Rev. Stat. Ann. § 72:36-a).
Surviving spouses qualify for both benefits.
Qualifying service for purpose of the exemptions is:
1. WW I between April 6, 1917 to November 11, 1918 (extended to April 1, 1920 for service in Russia, in some circumstances);
2. WW II (December 7, 1941 to December 31, 1946);
3. Korean Conflict (June 25, 1950 to January 31, 1955);
4. Vietnam Conflict (December 22, 1961 to May 7, 1975);
5. Vietnam Conflict (July 1, 1958 to December 22, 1961), if the resident earned the Vietnam service medal or the armed forces expeditionary medal;
6. Persian Gulf War (August 2, 1990 and an end date set by presidential proclamation or by law); and
7. any other war or armed conflict that has occurred since May 8, 1975 in which the veteran earned an armed forces expeditionary or theater of operations service medal (N.H. Rev. Stat. Ann. § 72:28).
New York law provides three categories of property tax exemptions for qualified veterans: the optional “alternative” and “Cold War” exemptions and the mandatory “eligible funds” exemption. The exemptions are from general municipal taxes, not school taxes or special district levies.
New York law allows towns to exempt from taxation 15% of the assessed value of property owned by veterans who served during wartime or received an expeditionary medal (N.Y. Real Property Tax Law § 458a). The law also provides an additional (1) 10% exemption to combat zone veterans and (2) exemption to disabled veterans equal to one-half of their service-connected disability ratings. (Thus, a veteran who has a 50% disability qualifies for an additional 25% exemption.)
Towns may provide the maximum exemption specified in law or pass a local ordinance increasing or reducing them. The maximums specified in law are $12,000 for a wartime veteran, plus $8,000 for a combat-zone veteran and an additional $40,000 for a disabled veteran. Towns may increase the three maximums incrementally to as high as $36,000, $24,000, and $120,000, respectively. Alternatively, they may reduce them incrementally to as low as $6,000, $4,000 and $20,000, respectively.
New York City and municipalities in certain counties where the average residential property sales prices are significantly higher than the statewide average may increase the maximums incrementally to as high as $54,000, $36,000, and $180,000, respectively (N.Y. Real Property Law § 458-a2(d)(ii)).
The exemption can be applied only to the residence (including, at local option, a cooperative apartment) of a claimant (i.e., veteran or, under specified conditions, eligible surviving spouse or other dependent relative.)
For purpose of the alternative and eligible funds exemption, war service generally includes active-duty service during:
1. the Persian Gulf War (on or after August 2, 1990),
2. the Vietnam War (February 28, 1961 to May 7, 1975),
3. the Korean War (June 27, 1950 to January 31, 1955),
4. WW I (April 6, 1917 to November 11, 1918), and
5. WW II (December 7, 1941 to December 31, 1946).
Qualifying service also includes U.S. Merchant Marine and specified civilian service during WW II. Veterans who have received an expeditionary medal also qualify for benefits, as do honorably discharged reservists who served for a “significant” time on full-time active duty.
Cold War Exemption
The law allows towns to provide, for up to 10 years, a 10% or 15% property tax exemption to veterans who served during the Cold War, provided the veteran is not receiving any of the other exemptions (N.Y. Real Property Tax Law § 458-b). Towns may also provide, indefinitely, an additional exemption to disabled Cold War veterans, equal to one-half of their service-connected disability rating. The claimant (veteran or qualified surviving spouse) must own the property and live in it as his or her primary residence (unless medically absent or institutionalized).
The town may provide the maximums specified in statutes, which are $6,000, $9,000, and $30,000 or $4,000, $6,000, or $20,000. Alternatively they may pass a law reducing or increasing them based on various limits specified in the statutes.
For purposes of the exemption, the law defines the Cold War as September 2, 1945 to December 26, 1991.
Eligible Funds Exemption
The “eligible funds” exemption is available to veterans (and other designated persons) who buy real property with pension, bonus, or insurance money, and other similar funds, referred to as “eligible funds,” that they received from the U.S. government for their military or naval services, including some civilian service (N.Y. Real Property Tax Law § 458). The exemption reduces the property's assessed value to the extent that eligible funds were used in the purchase, generally up to $5,000.
The law provides an additional exemption on the primary residence of any seriously disabled veteran who has received federal assistance to acquire specially adapted housing or modify housing to make it adaptable.
More information on New York veterans' property tax exemptions is available at http://www.orps.state.ny.us/pamphlet/exempt/vets.htm
State law mandates a minimum $10,000 property tax exemption for qualified veterans with disabilities. But towns may increase the amount to $40,000. The exemption may be applied to real or personal property. The veteran must own the home that is the basis of the tax claim.
The following qualify for the exemption:
1. veterans receiving compensation for a 50% or greater disability,
2. veterans receiving non-service connected pensions,
3. veterans collecting military retirement pay for a medical military retirement, and
4. surviving spouses who do not remarry (VSA T.32 § 3802).
For purposes of the exemption, a veteran is anyone who served in active military, naval, or air service, and who was discharged or released under conditions other than dishonorable.