If the income of the owner or combined income of the owners of the property exceeds the maximum qualifying income designated in section §
25-2 above for the income tax year immediately preceding the date of making application for exemption. The term "income tax year" shall mean the twelve-month period for which the owner or owners file a federal personal income tax return or, if no such return is filed, the calendar year. Where title is vested in either the husband or the wife, their combined income may not exceed such sum, except where the husband or wife, or ex-husband or ex-wife, is absent from the property as provided in subparagraph (ii) of paragraph (d) of § 467 of the Real Property Tax Law, then only the income of the spouse or ex-spouse residing on the property shall be considered and may not exceed such sum. Such income shall include social security and retirement benefits, interest, dividends, total gains from the sale or exchange of a capital asset in the same income tax year, net rental income, salary or earnings and net income from self-employment, but shall not include a return of capital, gifts, inheritances, payments made to individuals because of their status as victims of Nazi persecution, as defined in P.L. 103-286, or monies earned through employment in the federal foster grandparent program and any such income shall be offset by all medical prescription drug expenses actually paid which were not reimbursed or paid for by insurance. Such income shall not include veterans disability compensation, as defined in Title 38 of the United States Code. In computing net rental income and net income from self-employment, no depreciation deduction shall be allowed for the exhaustion and wear and tear of real property held for the production of income.
