For those living in New York City, there are several tax credits available. They can help you offset what you owe the city, but won’t affect your state income tax liability.
The STAR program provides property tax relief to homeowners in school districts across the state. This is done by exempting an annual variable amount from the true value of your home.
STAR Program
The STAR Program provides property tax relief for homeowners, mainly in the form of partial exemptions from school property taxes. There are 2 types of STAR exemptions: Basic and Enhanced.
The program is administered by the Office of Real Property Tax Services (ORPTS), a division of the New York State Department of Taxation and Finance. Homeowners who meet eligibility requirements can receive a STAR exemption from their school property taxes, or a rebate check, depending on the type of STAR benefit.
Unlike other state school tax relief programs, STAR does not provide additional funds to local school districts. Instead, it shifts some of the cost of property tax relief to the state, thereby making up for any revenue loss in the local schools. This has the effect of lowering the overall school tax burden in the community and encourages additional spending on education.
In the 1999-2000 school year, average property tax savings under basic STAR and the enhanced STAR senior exemption in NYC were $69 and $345 per participating household, respectively. This was due to low participation among eligible households citywide. IBO estimates that only 57 percent of eligible households in New York City took advantage of the enhanced STAR property tax exemption in its first year, compared to 88 percent elsewhere in the state.
A larger share of STAR property tax relief benefits were experienced by class one homeowners than by class two households under both the enhanced and basic STAR exemptions. This concentration of rewards in districts with higher levels of homeownership is an important part of STAR’s design.
As a result, the program has shifted the bulk of its benefits to residents of districts with high rates of home ownership and little or no other property tax relief available. In addition, a portion of the STAR savings is used to pay for PIT relief, which increases the city’s share of statewide property tax benefits and extends them to renters.
In the upcoming 2023-2024 school year, the STAR program will continue to offer both a Basic STAR exemption and an Enhanced STAR exemption for owner-occupied primary residences. Both exemptions can be obtained from the assessor of the county in which the property is located. In addition, a new STAR credit may be applied for if the homeowner’s income exceeds $250,000 and less than or equal to $500,000. This credit will be in the form of a check. The amount of the credit will never be higher than the value of the STAR exemption.
STAR Property Tax Relief
The STAR Property Tax Relief program is a state-financed exemption from school property taxes for owner-occupied, primary residences. The STAR program is administered by the Office of Real Property Tax Services (ORPTS), a division of the New York State Department of Taxation and Finance.
Eligibility is limited to owners of residential (class one and two) homes. This includes owner-occupied coops and condos.
Unlike the senior citizen homeowner exemption (SCHE), STAR is not available for rental properties or second homes, but it does provide an income-based credit that reduces your property taxes.
In a high-property tax state like New York, a little bit of extra money can go a long way to help you pay your bills. That’s why it’s important to know how to take advantage of STAR.
Basic STAR is for homeowners whose total household income is $500,000 or less, while Enhanced STAR is for seniors 65 and older whose combined household income is $60,000. In addition to qualifying as an owner-occupied, primary residence, you need to meet the following requirements:
First, your home must be located in an eligible school district. You can find out which school districts are eligible by contacting the school district in which you live.
Next, you must submit a completed STAR application form to the assessor. You must also attach a copy of your current federal or state income tax return to your application.
Then, you will receive a STAR credit check by mail that you can use to offset your property tax bill. You must keep your STAR credit status in good standing for five years or until your home becomes exempt from property taxes again.
In addition to property tax relief, STAR also provides a supplemental program called STAR PIT, which supplements local school tax benefits. When fully implemented, STAR will shift as much as $464 million in local support for education to the state. This will help to fund the state’s education budget and support a wide range of programs, including teacher compensation, special education and social service funding.
STAR PIT Relief
STAR property tax relief is designed to shift a portion of local school taxes burdens to the state, via property tax relief. In New York City, this shift is mainly achieved by reducing the residential property tax rate. However, since renters make up nearly two-thirds of the city’s population, STAR’s incentive to increase education spending is not as strong in the city as in other areas.
As a result, New York City’s share of statewide STAR benefits is far less than in other parts of the state. In 1998-1999, the Governor’s Office estimated that only 23 percent of statewide eligible homeowners participated in property tax relief and fewer than 20 percent claimed PIT reductions.
Under the STAR program, all property owners who qualify for a Basic or Enhanced STAR exemption receive an income tax credit equal to their full value of the home. This value is adjusted annually based on the local housing price index. Enhanced STAR exemptions are available to property owners with an income below or at least equal to $250,000 in the year the owner owns-occupied the home and who have school district property taxes that remain under the maximum property tax cap.
In order to receive an Enhanced STAR exemption, the homeowner must enroll in an income verification program. They are required to file a form to the assessor’s office to verify their source of income each year.
This is an important change in the program because it makes the program more transparent and allows taxpayers to keep a better record of their incomes. It also helps avoid potential fraud.
Moreover, the income verification process will reduce the number of homeowners who don’t pay their taxes and miss out on the benefit, which is an important part of the program.
The changes are part of the state’s budget for 2016-17 and are intended to transition STAR from an upfront savings in school taxes to an income tax refund check. They were enacted under the direction of Governor Cuomo, who said they would help ensure that homeowners with a STAR exemption receive their benefits in a manner that’s convenient to them and their families.
STAR Eligibility
The STAR program is designed to shift a portion of school tax burdens to the state, via property tax relief. This allows for a significant reduction in local school taxes and helps to lower the cost of education.
Unlike 421a tax abatements, STAR savings are made up by New York State and not added to your school tax bill, so they don’t affect the total amount that goes to your local school district. In this way, STAR is a win-win for all.
Homeowners are eligible for the STAR exemption and rebate check if their household income is $250,000 or less. However, you will not receive a credit check if you make more than this.
You must register with New York State to be eligible for a STAR tax exemption and you do not need to re-register each year unless there is a change in ownership or an income increase. You can register online or download the forms and mail them to your local assessor.
Enhanced STAR is a special program for senior citizens that provides a property tax exemption on primary residences where the household income is $60,000 or less and the owner is 65 or older. This exemption can be taken in addition to the basic STAR exemption and is available for a single-family home, apartment, condo or cooperative.
The Enhanced STAR Eligibility Requirements
You will be required to complete an income verification form (Form RP-425-Wkst, Income for STAR Purposes Worksheet) and submit it to your local assessor along with proof of your 2019 federal or state income tax return. If you do not file a tax return, you will need to include the 2020 taxes on your application and provide a copy of your social security card.
Then, your local assessor will verify that you are eligible and if so, send you a rebate check or reduce your school tax bill. This will help to keep your property taxes low and your home safe.
If you haven’t registered for the Enhanced STAR exemption, you must do so by May 2, 2014, or before that date, if you own your property in the Town of Mamaroneck. If you have already registered with the state for a STAR tax exemption and your household income is $250,000 or less, you will continue to receive a STAR tax exemption on your property taxes until you decide to switch to a STAR credit.
