What is the disabled veteran valuation exclusion?

This new program enacted in 2008 provides a property tax benefit to qualifying disabled veteran homeowners by reducing the value of their home for property tax purposes by up to $300,000.  The homestead must be owned by the veteran, or by the veteran and her/his spouse, in order to qualify.

What is the benefit?

Veterans who are permanently and totally (100 percent) disabled are eligible for a valuation exclusion of $300,000; veterans who are not permanently and totally disabled, but who have a disability rating of 70 percent or higher, are eligible for an exclusion of $150,000.  The exclusion amount is subtracted from the value of the homestead as determined by the assessor before property taxes are calculated.  If the value of the homestead in any year is less than the exclusion amount, the homestead is totally exempt from property taxes for that year.

How much is the benefit worth?

As a rule of thumb, the $300,000 exclusion will reduce property taxes by approximately $3,000 each year, while the $150,000 exclusion will reduce property taxes by approximately $1,500 each year.  The actual benefit for an individual home will vary based on the value of the property and the local tax rate.

What are the qualifications?

To qualify, the veteran must have been honorably discharged from the U.S. armed forces as indicated by U.S. Department of Defense form DD214 or other official military discharge papers, and must be certified by the U.S. Veterans Administration as having a service-connected disability with a disability rating of 70 percent or higher.

How does a veteran enroll in the program?

The veteran must file application form CR-DVHE70 or CR-DVHE100 with the county assessor and provide proof of honorable discharge and of disability rating.  Veterans who are permanently and totally disabled do not need to reapply each year; other qualifying veterans need to reapply each year, since their disability rating could change from one year to the next.

When do the benefits begin?

Applications received prior to July 1 of any year take effect for taxes payable in the following year, unless the homestead is a manufactured home, in which case the benefit takes effect in the same year.  For 2008 only, the application deadline was extended to September 1.  Veterans who fail to apply in the first year that they are eligible may file in any subsequent year and begin receiving benefits after that.

How is the tax benefit paid for?

Excluding all or a portion of the value of the disabled veteran’s home from property taxes slightly increases the taxes on other properties (homes, businesses, farms, etc.) in the taxing jurisdictions where the veteran’s home is located, meaning that the surrounding properties are providing the property tax benefit to the veteran.  There are some state aid programs to taxing jurisdictions that will provide additional aid to jurisdictions with excluded value, so in those cases a portion of the tax benefit is provided from state resources.

What about special assessments?

Other charges that might appear on the property tax statement, such as special assessments and various types of fees, are not affected by the valuation exclusion and must continue to be paid in full.

Are there survivor benefits?

For a veteran who is permanently and totally disabled, the surviving spouse continues to receive program benefits in the two calendar years following the death of the veteran, if the surviving spouse continues to own and live in the house.  There is no survivor benefit for spouses of veterans qualifying at the 70-percent standard.  There is also no survivor benefit for spouses of veterans who are not enrolled in the program before the veteran’s death.

How does the exclusion apply to an agricultural homestead?

For agricultural homesteads, the exclusion applies only to that portion of the property consisting of the house, garage, and surrounding one acre of land.

Does the market value exclusion affect other property tax relief programs?

Properties that qualify for the disabled veterans homestead valuation exclusion do not receive the market value homestead credit.  Properties that qualify for the disabled veterans homestead valuation exclusion are not eligible to receive the preferential classification (1b) generally available on the first $50,000 of market value on homesteads owned by persons who are blind or disabled.  Homeowners receiving the valuation exclusion will continue to be eligible for the property tax refund program, although it is likely that they would qualify for a significantly smaller refund because their property taxes would be so much lower due to the exclusion.