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Decreasing Property Taxes on Family Homes

Posted on 3rd Sep 2016

The New York School Tax Relief Program (STAR) is an important benefit for homeowners interested in reducing their property taxes. It is quite easy to fulfill the requirements, so everyone who is eligible should apply.

According to the prevailing real estate law, homeowners in New York City pay their property taxes four times per year, in July, October, January, and April. The Basic STAR program provides homeowners an exemption in the form of a tax break of approximately $300, provided the home is the primary residence and the homeowner’s income is below $500,000. Homeowners who are at least 65 years of age are eligible for the Enhanced STAR, an exemption of approximately $600.  As in the case of the Basic STAR, the home must be the primary residence, but the owner’s income cannot be more than $86,000.  The exemption is allocated through each tax bill.

There has been an important recent development. This year, the New York State legislature has modified the requirements for new applicants. The New York City Department of Finance sent correspondence to homeowners in May explaining the procedure. Homeowners must apply directly to the New York State Department of Taxation and Finance to receive the exemption, even if they were already approved by the New York City Department of Finance.  It is significant that the exemption will not appear on their tax bill. No reduction will be noted.

New applicants include those who did not own their property on March 15, 2015, or who only applied for the exemption in time for the tax year that began on July 1, 2016. Those who owned their homes prior to May 1, 2014, don't need to register if they already have the exemption. As long as they are eligible, they will continue receiving their exemption from the New York City Department of Finance.

This new policy affects New York real estate, and can become a trap for those who are unaware. The deadline was July 1, 2016. A homeowner who imagined receiving the exemption starting July 1 for the 2016-2017 tax year will now face a new reality. Instead of receiving a reduction, the new applicant is now required to pay each tax bill in full. In September, the New York State Department of Taxation and Finance will send a check equal to the year's exemption. 

This new practice puts the responsibility on homeowners to make sure that their STAR check is actually used for the intended purpose. It seems as though the New York State legislature is requiring homeowners to fund their own tax exemption, but only after everyone pays in full. Those who missed this year's deadline should consider applying next year.

If you’re unsure of how this policy applies to you, contact a real estate lawyer today.