“School Tax Relief” (STAR) Program
New York state, wherein property taxes are only applied to real property, grants local governments and public school districts the ability to reduce the property taxes paid by qualifying senior citizens. Senior citizens 65 years old or older and who are within the income limitation can have the assessed value of their residential property reduced by 50%. The law provides for every county, village, town, city or school district to set the maximum income limit for qualifying to between $3,000 and $24,000. There is also a provision in the law for the communities to grant a reduction of less than 50% on a sliding-scale based for otherwise qualified senior citizens whose income exceeds the limit by less than $1,000 if there are three income ranges set or by $900 if six ranges are set.

While there is not a general property tax exemption in the state, any New York resident who owns and lives in their primary residence, whether a condominium, cooperative apartment, one- or multi-family home, or farm home, can be partially exempt from school taxes under the School Tax Relief Program (STAR) program. The STAR program has three subsections:

1) Basic STAR program: The first $30,000 of the full, assessed value of any owner-occupied, primary residence is exempted from school tax assessments, regardless of the owner’s age or income level. This program is administered by the local tax assessor’s office.

2) 2008 Middle Class STAR Rebate Program: A property tax relief program providing homeowners a rebate check in addition to their Basic or Enhanced STAR Exemption. Under this program, there are two types of rebates available:

a) a Middle Class STAR Rebate is given to homeowners receiving the Basic STAR exemption on their property taxes (based on their school tax rate) on a sliding-scale linked to their income level in an inverse relationship (i.e. the higher the income level, the lower the rebate). Homeowners living in New York city receive a reduced rebate if their income exceeds $120,000 per annum, while the rebate is reduced for upstate homeowners with incomes over $90,000. Homeowners earning more than $250,000 are not eligible for a rebate. Because of these income limitations, homeowners must apply for the rebate.

b) senior citizens over the age of 65 who also receive an Enhanced STAR Exemption (see below) are automatically eligible for a Middle Class STAR Rebate on their property tax assessment, so no application is required.

The rebate checks are automatically issued at the end of October for previous recipients, while those who did not previous apply (i.e. in 2007) or those whose property information changed during the year, will be automatically mailed an application.

3) Enhanced STAR Exemption: The first $50,000 of the full, assessed value of any owner-occupied, primary residence is exempted from school tax assessments for senior citizens 65 years old or older, though there are income limitations. For property owned jointly by a husband and wife or siblings, at least one of the joint owners must be 65 years old by December 31 of the year in which the exemption will be taken and the joint owners’ combined income must meet the limitation set.

For additional information on all three STAR Programs, contact a CPA or tax preparer and review the New York Department of Taxation and Finance website.

General Information
- Tax Department obtains information for the 2008 Middle Class STAR Rebate Program from the New York City Department of Finance for properties in the city and from the Office of Real Property Services, which gathers information from local assessors, for properties outside New York City.

- The 2008 Middle Class STAR rebate can affect taxpayers’ taxable income under two circumstances:
1) If the taxpayer itemized deductions on their 2008 return, they must deduct the rebate amount from the “Property Taxes” paid figure included in the return

2) If the taxpayer’s rebate is higher than the actual property taxes paid, the excess rebate must be included as income on the tax return

Real Property Tax Credit
New York state residents with gross household income of $18,000 or less and who pay real property taxes or rent on their residence are eligible for the Real Property Tax Credit. Non-residents and partial-year residents do not qualify for this tax credit.

If all qualified household members are under the age of 65, the credit is a maximum of $75. However, if any one of the qualified household members is 65 years old or older, the credit is a maximum of $375.

New York State residents who are not required to file state income tax returns can receive a refund for the maximum credit amount, while state income tax return filers qualify to receive a refund of their real property tax credit that exceeds their state tax liabilities.

All of the following conditions must be met for the 2008 tax year to qualify for a Real Property Tax Credit:
• Household gross income was $18,000 or less
• Same New York residence was occupied for six months or more
• Taxpayer must be resident of New York state for all of 2008
• Taxpayer is not claimed as a dependent on any other taxpayer’s federal income tax return
• Residence was not completely exempted from real property taxes
• Current market value of all real property owned is less than $85,000 (i.e. houses, garages, land)
• All supplemental conditions for either Homeowners or Renters listed below:

a) Homeowners
- Taxpayer and spouse paid at least some real property taxes
- Rent received for non-residential use of taxpayer’s residence was 20% or less of total rent collected

b) Renters
- Taxpayer or other member of taxpayer’s household paid rent on the residence
- Average monthly rent taxpayer and other members of taxpayer’s household paid was $450 or less, exclusive of heat, gas, electricity, furnishings or board

For additional information on all the Real Property Tax Credit, contact a CPA or tax preparer and review the New York Department of Taxation and Finance website.

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