Tips & AdviceUnderstanding New York’s STAR Tax Credit

Understanding New York’s STAR Tax Credit

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Those living in one of the most expensive cities in the country, New York, often look for money-saving opportunities. New York State’s STAR tax credit program offers an easy option to save a few hundred dollars annually.

Newer residents may not know about the program or which route is best for them. We’re here to shed some light on the subject.

What exactly is the STAR program?

New York State’s School Tax Relief (STAR) program provides tax breaks to eligible homeowners by granting them a rebate on school property taxes. The program lowers property taxes for those who own property in a New York State school district.

First implemented in 1997, the program was reformatted in 2015, changing from a tax exemption program to a tax credit program. Previously, homeowners received a basic tax exemption. Under the new system, participants receive a check at the end of each fiscal year as their rebate.

The current iteration of the STAR program offers two levels: Basic STAR and Enhanced STAR, which currently provide an estimated yearly savings of about $300 or $650, respectively.

Who is eligible for the NYC STAR credit?

The Basic STAR and Enhanced STAR programs each have their own criteria for eligibility. Those who rent apartments are not eligible for any STAR program. Additionally, long-time homeowners with existing STAR exemptions do not have to register for the program and will continue to receive their credit.

Basic STAR Credit

To receive the Basic STAR credit, you must own the home, apartment, or co-op unit that serves as your primary residence and have a combined household income of less than $500,000. Participants under this program version receive an estimated yearly rebate of $293.

Those who received Basic STAR between 2015 and 2016 but lost the exemption may qualify for re-admittance into the program. To restore their credit, homeowners must make under $250,000.

Enhanced STAR Credit

To earn the Enhanced STAR credit, you must own your primary residence, be over 65, and have a total yearly income of less than $93,200. Those who qualify for this program version receive an estimated annual rebate of $650.

How do I apply?

You can register for the STAR program on the Department of Taxation and Finance website. You only need to apply for the STAR program once, as the state will continue to send you your STAR credit annually as long as you continue to qualify.

Additionally, if you previously enrolled in the Basic STAR program, you will automatically be granted Enhanced STAR benefits if you experience a life change that fits eligibility requirements. Examples include a decrease in income or a 65th birthday.

What else should I know?

Homeowners who received STAR exemptions through the previous iterations of the program before March 15th, 2015, can continue to receive their STAR benefits as an exemption rather than a tax credit.

If you inherit a home from an owner who continually received the STAR exemption since 2015 or earlier, you may be able to transfer the exemption status to your name once you assume ownership of the residence. If you currently receive the STAR exemption but wish to switch to the STAR credit program, you can apply through the regular application form mentioned above.

Those living in a cooperative apartment must follow different steps to receive STAR benefits. Co-op residents are shareholders in the corporation that owns the building and do not own the property. Therefore, their STAR rebates go to the co-op as a whole. The co-op’s managing agent calculates the savings and transfers these benefits to recipients. The co-op distributes the cooperative tax credits by reducing the residents’ monthly maintenance fees.

Conclusion

New York State homeowners who purchase property in a school district can apply for the STAR program. It offers Basic and Enhanced options, providing different amounts of money, and interested participants can refer to the New York State website to determine if they qualify. While you can do whatever you like with the money from the rebate, we recommend putting the extra funds toward the hidden costs of owning a home.

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