TAX REBATE
Wishing on a STA’
By FRANK LOVECE
hen you wish upon a STAR, makes no difference
‘who you are ~ because every homeowner is el
sible for the New York State School Tax Relief
(STAR) program, even ones in co-ops and condos.
It wasn't always so expansive; the first version, enacted in,
1997, applied only to senior citizens. But starting in 1999-
2000, an additional tier began applying to all ages. And this
past March 30, Governor Eliot Spitzer signed legislation
creating a new, sub-tier version aimed solely at middle-class
homeowners.
‘So, what do boards need to do in the wake of this legisla-
tion? Not much more than they're doing now. But it’s impor-
tant that they do it right.
STAR was designed to reduce homeowners’ annual prop-
erty taxes ~ the traditional way of funding the public schools
= by exempting the first $30,000 of a primary residence’s
assessed value. It works by having the state pay school dis-
tricts a certain amount of money each year from a specially
set-aside portion of the state's personal income tax revenue,
‘The state then reduces homeowners’ property tax by an off-
setting amount. So, let’s say the state pays a school district
$100,000 from this fund, and 1,000 homeowners live in that
district. Each homeowner's annual property tax bill would
be reduced by $100, And last year, the state began sending
homeowners an additional rebate check, usually totaling
anywhere from $200 to over $1,000.
‘That cool cash may be cold comfort, however, since a few
hundred dollars isn’t much when your property tax has gone
up by several thousand, as has been the case in much of New
York State ~ where, over the last nine years, property taxes
have increased by 4 percent. Still, boards should know how
58 HABITAT SEPTEMBER 2007
to apply for, receive, and distribute the rebate.
The first Couple of parts are easy. t's that third that can get
tricky, and the new Middle-Class STAR Rebate Program, as
the state Division of the Budget calls it, makes it just a mite
trickier.
The longstanding versions of STAR are Basic STAR and
Enhanced STAR. The former is available to owners of one-
to three-family houses, condo owners, and co-op sharehold-
ers. There is no income or age limit, but units held by spon-
sors or their successors aren't eligible.
‘The later Enhanced STAR is an additional rebate for hom-
‘eowners aged 65 of over as of December 31 of the exemption,
year, with a household income of $70,650 or less. In New
York City, the exemption (fiscal) year runs from July I to the
following June 30.
The newly enacted Middle-Class STAR gives a separate
rebate based on a sliding scale of income. For upstate home-
‘owners, the amount of the rebate begins shrinking as annual
income exceeds $90,000. For the New York City metropoli-
tan region, where the cost of living is higher, that figure is
$120,000. Homeowners with incomes of $250,000 or more
‘get no Middle-Class STAR rebate, though they can still get
Basic STAR.
For first-time applicants, the co-op or condo board or its,
managing agent is required to do the filing, not individual
shareholders or unit-owners. You can download the multi-
page form from the New York City Department of Finan
‘There is a separate form shareholders and condo owners fill
‘out themselves, titled “Exemption and Abatement Applica-
tion for Owners.” A much simpler, two-page form is used
not only for STAR but also for exemptions for war veterans,
the disabled, the clergy, and others. (For all these forms,
see box, page 59, opposite.)
‘The deadline to file is February 15 for each upcoming,
fiscal year, with property ownership information accurate
as of the preceding January 5. So, since New York City's
fiscal year runs July 1 through June 30, this means that for
the 2009 fiscal year, which runs July 1, 2008, to June 30,2009, applications are due this coming
February 15, 2008, reflecting property
‘ownership as of January 5, 2008.
It's all a lot simpler than it sounds,
As Jennifer Christman of Wentworth
Property Management, the manag-
ing agent of the six-building, 348-unit
Nostrand Gardens co-op in Sheepshead
Bay, Brooklyn, describes the process:
“I give the [exemption and abatement]
applications to the shareholders, and
they fill them out and send it in them-
selves. Ifthe shareholders get the form
from the city, they bring it to my office
and Ifill out the management company
Portion. Ittakes two minutes.”
For co-ops, once the city processes
the applications, the Department of
Finance sends the management com-
pany a list of names and addresses for
each co-op unit and the rebate amount
to which each is entitled. The corpo-
ration's property tax bill is reduced by
the total of amount of these rebates (or
as the city puts it: “Abatements are ap-
plied towards the Statement of Account
for the entire co-op”) and the corpora-
tion pays each shareholder.
And that’s the tricky part. “By law,
co-ops have to give it to them within
the fiscal tax year,” notes. attorney
Richard Siegler, a partner at Stroock
ESOURCE
& Stroock & Lavan. In actual practice,
this generally means a credit applied
to each shareholder's monthly mainte-
nance in the amount ofthe rebate. Since
few co-ops have the cash flow to apply
everybody's rebate in a single month,
they usually spread it out over several
‘months. (You also usually combine it
‘with other tax rebates, such as veterans’
abatements and the Senior Citizen Ho-
meowners’ Exemption, or SCHE.)
“We receive a Department of Fi-
nance printout that lists how much
credit or abatement each person gets,”
describes Denise Clarke, Wentworth’s
accounting supervisor. “So, let’s says
Denise Clarke is going to get a $500
STAR tax credit and a $400 veteran's
credit or whatever. We send the report
to the board and then the board decides
how to distribute it — a one-time credit
‘or over months.
“The only things we [as a manage
‘ment company] have to do is make sure
we get [distribution] instructions back
from the board — most boards give a
maintenance credit over seven or eight
months ~ and make sure people on the
list have not moved or died. The STAR
abatement goes with the unit, so if you
moved, it applies to the next owner.”
“Move” doesn’t just mean if the
For questions about the co-op/condo property tax abatement programs,
including STAR, you can contact:
+ NYC Department of Finance Property Division
Co-op/Condo Abatement Program
66 John Street, 12th Floor
New York, NY. 10038
212-361-7099
wor. nye gov/finance
+ STAR forms:
eet | |
.www.nycgov/himl/dof/himl/property/property_tax_reduc_coop_condo.shtml
Exemption and abatement application for owners
‘www nyc.gov/himl/dof/himl /pdt/OSpdf/exemption_obatement.pdf
Mail / fax forms to:
NYC Department of Finance
PO. Box 3120
Church Street Station
New York, N-¥. 10008-3120
(fax) 212-361-7799,
Complete the submi
‘wns. gov/
-
shareholder has sold the apartment and
moved out: STAR applies to primary
residences only, so if a shareholder is
subletting his or her co-op and living
and voting in Florida, he or she can't
claim the rebate.
Many co-ops, with other forms of
shareholder tax abatements, assess
shareholders a per-share fee equal to the
amount of the rebate. Shareholders see
neither the reduction nor the assessment
on their monthly maintenance bill since
they cancel each other, and the building
raises revenue in what most boards con-
a relatively painless way: people
don’t miss what they never had.
You can't do that equitably with
STAR, however, since Basic STAR
gives a $30,000 exemption on a home's
assessed value, and Enhanced STAR
gives eligible seniors a $56,800 exemp-
tion. Simple mathematics tells you this,
means shareholders getting the lower
‘exemption would wind up paying a bis
‘ger per share assessment than share-
holders getting the larger exemption,
Condo owners are treated the same as
homeowners and get rebate checks and
tax credits directly.
The newly enacted Middle-Class
STAR gives a separate rebate based on
a sliding scale of income. For upstate
homeowners, the amount of the rebate
begins shrinking as annual, adjusted
‘2r0ss income exceeds $90,000. For the
New York City metropolitan region,
‘where the cost of living is higher, that
figure is $120,000. Homeowners with
incomes of $250,000 or more get no
Midate-Class STAR rebate, though
they can still get Basic STAR. The state
tax department began mailing applica-
tions to New York City homeowners on
July 16, 2007, with a deadline of No-
vember 30 for the form to be filled out
and returned. Or, instead of mailing it
back, you can complete the submission
online (see box, at left). A small, ad-
ditional STAR benefit goes directly to
taxpayers as a form of credit on your
New York City Personal Income Tax
(PIT) filing. Married individuals filing
joint returns get a $290 credit, and in-
dividuals get a $145 credit, subject to
$250,000 income cap. This relatively
small addition carries the acronym
STAR PIT.
In any case, the new Middle-Class
STAR, like its two sister STARS, may
not enhance the co-op or condo bot-
tom line, but it assists shareholders and
‘owners in making their monthly pay-
‘ments. In that respect, this additional
benefit helps just that little bit more. Hl
SEPTEMBER 2007 HABITAT 59