STAR. What exactly is STAR? STAR is a New York State tax relief program that lowers property taxes for owner-occupied primary residences (click here for a STAR Exemption FAQ sheet). Meaning, to be eligible for the STAR reduction, you must own a property that you use as your primary residence. The STAR exemption applies only to school district taxes. There are two levels of STAR benefits – Basic STAR and Enhanced STAR.
For Basic STAR, there is no age limit, but beginning July 1, 2011, annual adjusted gross income must be $500,000 or less (previously there was no income limit.). To be eligible for Enhanced STAR, you must own a property that you use as your primary residence and be 65 or older. In addition, the total annual income of all the owners of the property must be $79,050 or less.
Your primary residence is typically the home that you occupy for most the year and is generally the place where you vote and where your car is registered. If you own more than one property, only your primary residence can receive a STAR tax reduction. STAR applicants may be asked to prove “primary residence” and, in the future, certify that the property is still the primary place where they reside.
The level of the STAR benefit s set every year by the State, based on the type of property you own. For example, each tax year from July 1 – June 30, owners of Class 1 properties (that is 1-, 2- and 3-family homes and some condos) can save approximately $200 in property taxes if they had the BASIC star reduction and about $380 if they had the Enhanced STAR reduction. The benefit depends on the level set by the State.
Basic and Enhanced STAR applications must be filed by March 15th. Applicants that are received by that date and approved will result in lower property taxes beginning July 1st of the next tax year.
STAR Legislation specifically requires cooperative apartment corporations and their managing agents to be responsible for the administration of the tax reduction received by the cooperative apartment owner. Most people who receive the STAR exemption will see the tax savings indicated directly on their tax bills. However, for cooperative apartment shareholders, the tax savings will appear on the school tax bill for the cooperative cooperation. The corporation, through its managing agent, must credit the tax savings against the fees of the cooperative apartment shareholder who has received the exemption.
Owners of co-ops also receive the tax reduction beginning on July 1st. However, management companies receive a report from the DOF each November breaking down the total exemptions by apartment/unit. Therefore, co-op management cannot refund the tax reduction to individual co-op owners until November, at the earliest. It is left to the discretion of the management company how to pass along the tax savings to individual shareholders.
-Nahum Palefski, Esq.