Bill > HB77

This bill, known as the Disabled Veterans Property Tax Debt-To-Income Ratio Exemption Act, aims to prevent ad valorem taxes on a homestead from being included when calculating a disabled veteran's debt-to-income ratio, which is a measure used by lenders to assess a borrower's ability to repay a loan. Specifically, it allows a veteran with a 100 percent disability rating from the U.S. Department of Veterans Affairs (VA) to obtain a tentative certificate of permanent and total disability before purchasing a homestead, provided they submit an affidavit, the purchase agreement, and documentation from the VA confirming their disability. This certificate, issued within 20 days, will be considered valid for property tax exemptions under specific Alabama Code sections (40-9-19 and 40-9-21) once the homestead is purchased. Consequently, settlement agents or loan closing officers are prohibited from including these homestead property taxes in the debt-to-income ratio calculation for a borrower who presents this tentative certificate. The Department of Revenue will create the form for this certificate, confirming the veteran's eligibility for property tax exemptions. This act is set to become effective on October 1, 2026.

Budget and Finance, Military Affairs and Security

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