This STAR Tax Relief Exemption in New York City

The New York State School Tax Relief Exemption, or STAR, is a property tax break. The program, initiated in 1997, provides real estate property tax relief to the state’s residents. The program reduces local property taxes for eligible residents, and reimbursed the school district by New York. Thus, the district’s school funding is unaffected.

It is not a well-understood program. Providing you meet the qualifications, you can receive significant tax savings. There are two types of STAR: Basic Star and Enhanced STAR.

It is a simple concept. The overarching goal is to provide New York State residents with a break on property tax. However, there are income thresholds to exclude the wealthy under the assumption that they do not need the break,

Basic STAR

You are eligible for the Basic STAR program on your primary, owner-occupied residence, providing your income when combined with your spouse, which is less than $500,000. If this is the case, the first $30,000 of your home’s value, including co-ops and condos, is exempt from tax.

Enhanced STAR

This more generous program is designed to give senior citizens a tax break. For residents at least 65 years old and have incomes that are $86,000 or less this year ($86,300 for 2019), the first $66,800 of your home’s value is exempt from tax.

Unlike many of the state’s other cities in New York City, the benefit applies partially to New York City and school taxes. New York City’s Department of Finance assesses your property annually.

There are two residential classes. Class 1 applies to one-to-three family homes, while Class 2 is for co-ops, condos, and rentals with more than four units. For Class 2 properties, the property tax rate is 12.719%, with a school tax rate of 11.869%. It is 20.385% for Class 1 properties (7.426% school tax rate).

Remember to register

Generally, you do not receive the credit automatically. When applying for the STAR benefit, you must register with New York State. The good news is that you only have to do this one time. After that, even if you become a senior citizen and qualify for the Enhanced STAR program, you do not need a new registration.

To register, you need to have the property owners’ names, social security numbers, addresses, the approximate date you purchased the property, and a current school tax bill. You will also need the address of any other residential property you own in the state.

Additionally, the state asks for your federal or state income tax returns. Otherwise, if you did not file a tax return, you need your income information, including wages, interest and dividend income, unemployment compensation, pension income, social security, and other income.

In practice

A lump sum is paid to the building, and the management company is responsible for ensuring you receive the payment. However, it can do this in various ways, including a cash payment, a credit (e.g., your monthly maintenance), or adding it to the reserve fund.