Computing Disposable Income

The maximum amount of annual income you may receive to qualify for the exemption is $40,000. The disposable income you receive during the year in which you apply determines your eligibility. In other words, if you are filing for an exemption on your 2019 taxes, you must use your 2018 income to qualify.

Please remember you must provide documentation to the Assessor for all income received by you, your spouse or domestic partner, and any co-tenants. Your application will not be processes without your income documentation. 

Income Sources

Disposable income includes all sources, whether or not they are taxable for federal income tax purposes. Losses and depreciation may not be deducted. Some of the most common sources of income include:
  • Wages, salaries and tips
  • Social Security benefits (include 100% of your benefits, taxable and non-taxable)
  • Railroad retirement benefits  (include 100% of your benefits, taxable and non-taxable)
  • Pension and annuity receipts, including retirement bonds, distributions from individual retirement accounts and distributions from Keogh plans
  • An annuity is a payment of a fixed sum of money received at regular intervals. Some examples of annuity payments include unemployment compensation, disability payments and welfare receipts (excluding amounts received for the care of dependent children)
  • Interest and dividend receipts
  • Business income, depreciation and business losses may not be deducted
  • Rental income, depreciation and rental losses may not be deducted
  • Capital gains
An important thing to remember is that losses cannot be used to offset other income. For example, an applicant’s Schedule D shows a short-term loss of $5,000 and a long-term gain of $4,000 (net loss of $1,000). For the purposes of determining eligibility for property tax relief, the $4,000 gain must be included in disposable income even though the net effect is a loss of $1,000.

Deductions From Income

To determine your combined disposable income you may take deductions for the following expenses paid by you, your spouse, or your domestic partner:
  • Capital gains you receive from the sale of your primary residence, if the gain is reinvested in a replacement primary residence
  • Non-reimbursed amounts you pay for your spouse, yourself or co-tenant to live in a licensed nursing home, assisted living or adult care facility
  • Non-reimbursed amounts paid for prescription drugs for yourself, your spouse or co-tenant
  • Non-reimbursed amounts you pay for goods and services that allow you, your spouse or co-tenant to receive in-home care. The care received must be similar to the care provided by a licensed nursing home, assisted living or adult care facility
  • In-home medical treatment, physical therapy, Meals on Wheels (or similar meal delivery service) and personal care. Personal care includes assistance with preparing meals, getting dressed, eating, taking medications or areas of personal hygiene
  • Special furniture and equipment, such as wheelchairs, hospital beds and oxygen