Homestead exemption for partially disabled veterans advances

Partially disabled veterans could qualify for a homestead exemption under a bill advanced from the first round of debate March 20.

Under LB126, as introduced by Sen. Jen Day of Omaha, veterans who are at least 10% but less than 100% disabled due to a service-connected disability would qualify for a homestead exemption in an amount based on their disability percentage.

Day said only veterans with a 100% service-connected disability currently qualify for a homestead exemption. However, she said, veterans with partial disabilities as defined by the U.S. Department of Veterans Affairs rating system — including partial arm amputations — also suffer major physical and psychological effects from their injuries.

“It’s my hope that we can provide targeted property tax relief to those who have made these life-changing sacrifices,” Day said.

A Revenue Committee amendment, adopted 39-0, would replace the bill. It instead would create a new exemption under which claimants would pay a minimum amount of property taxes based on their household income. The exemption would be available to each category of current homestead exemption claimants.

A veteran who was discharged under honorable conditions, is drawing compensation from the U.S. Department of Veterans Affairs because the veteran is at least 50% disabled due to a service-connected disability and is not eligible for a total homestead exemption also would qualify for the new exemption.

A claimant of the new exemption would pay a minimum of $1,200 per year in property taxes. A claimant with an income between $38,910 and $100,000 if married or between $27,237 and $70,000 if single would pay an additional $120 to $4,800 per year.

To qualify for the new exemption, the value of a claimant’s total household assets at any point in the three years prior to application would have to be less than or equal to $1 million.

An application for the new exemption also would have to include documentation showing that the claimant has begun receiving Social Security or other retirement benefits.

For a new owner of property in a qualified census tract who receives the new exemption, the property would be valued at 50% of its actual valuation for five years.

The amendment also includes provisions of LB1151, introduced by Norfolk Sen. Robert Dover, which would update the definition of “occupy” under the homestead exemption program.

Under his proposal, a departure from a property for health or legal reasons would not disqualify an owner from receiving an exemption so long as they demonstrate an intention to return to the property.

Sen. Lou Ann Linehan of Elkhorn, chairperson of the committee, said the proposed changes in the amendment are intended to prevent abuse of the homestead exemption program and “skinny down” exemption amounts so that more Nebraskans can benefit.

Adams Sen. Myron Dorn supported the amendment, saying it would help control the homestead exemption program’s cost and ensure that it fulfills its intended purpose of allowing elderly and disabled Nebraskans to stay in their homes.

Dorn said an approximately $14 million increase in appropriations is needed to fully fund the program this fiscal year. As property valuations continue to rise, he added, the program’s total cost is projected to grow from approximately $142 million this fiscal year to $149 million next year.

Sen. Mike Jacobson of North Platte voted to advance LB126 to the second round of debate but said he could not support it as amended. Many rural Nebraskans could lose their homestead exemption due to the proposed changes, he said.

Linehan disagreed. She said current claimants would be eligible to claim the same exemption in future years, or they could choose to claim the new one.

Bellevue Sen. Rick Holdcroft introduced an amendment, adopted 40-0, to include provisions of his LB1019. They would require county assessors or county clerks to correct the assessment and tax rolls after a final order of the Tax Equalization and Review Commission.

Holdcroft said the change would eliminate the current requirement that a county board of equalization hold a hearing and vote on a final order of the commission.

Senators voted 39-0 to advance LB126 to select file.