Tax Court: Veteran’s Tax Exemption Not Applicable to Home Purchased After Veteran’s Death

In New Jersey, veterans and their spouses can claim a property tax deduction due to their status as a disabled veteran. If a veteran is determined to be 100% disabled by the Department of Veterans Affairs (VA), then the veteran may claim a property tax exemption which renders their property fully exempt from property taxes. Once a disabled veteran passes away, the veteran’s exemption may continue for the widowed spouse alone, even if they are not a veteran. However, as was recently determined by the Tax Court, the veteran’s exemption ceases when the property is sold.

In Neal v. Lawnside Borough, the Tax Court was presented with dueling summary judgment motions concerning whether the plaintiff could assert a veteran’s tax exemption. The county tax board, on motion by the defendant Lawnside Borough, determined that a disabled veteran’s widow could not claim the exemption. The Tax Court agreed with the county tax board and defendant, dismissing the plaintiff’s appeal, granting defendant’s motion for summary judgment and denying plaintiffs’ motion. The facts are as follows: the plaintiff’s spouse was a veteran of the Korean War and was determined to be 100% disabled by the VA in 2004. They had obtained a property tax exemption on the home which they owned at the time. The plaintiff and her husband sold the property in 2013. The plaintiff’s husband, the disabled veteran, died in 2016 and did not own a home at the time. In 2019, the plaintiff purchased a home with her son as joint tenants. Soon after, the plaintiff claimed her deceased husband’s disabled veteran’s status entitled her to a veteran’s tax exemption on the newly purchased home.

The Tax Court held that since the property was purchased after the veteran’s death, then the widowed spouse was unable to claim the property tax exemption. The court held that under New Jersey law, the tax exemption does not attach to the widowed spouse, but rather with the property. Therefore, since the property which was subject to the veteran’s exemption was sold in 2013, the veteran’s property tax exemption ceased.

If you want to read the decision, please click here.

The author acknowledges the assistance of William Olson, a Law Clerk at McKirdy, Riskin, Olson & DellaPelle, in preparing this article. Mr. Olson is a member of the Class of 2021 at Rutgers Law School.