All New York State homeowners receiving the basic STAR tax exemption must now register with the New York State Department of Taxation in order to receive the STAR exemption in 2014 and going forward. Every current recipient will receive registration instructions by mail with a registration deadline of Dec. 31, 2013.
Senior citizens receiving enhanced STAR benefits are not affected by the new registration requirements. In order to continue to receive the Enhanced STAR, seniors must renew annually at Village Hall.
The basic STAR tax exemption is available to all New York State citizens living in their owner-occupied primary residence where the adjusted gross income of the owner and spouse is less than $500,000. Since the Village of Bronxville assesses at 100 percent of current fair market value, STAR exempts approximately $96,000 of the full value of a home from school taxes.
The enhanced STAR provides a further benefit for senior citizens living in their primary and owner-occupied residence as long as the owner is 65 or over and has an income of $81,900 or less.
For the upcoming 2013-2014 tax bills, the enhanced STAR will exempt the first $203,310 of the full value of a home from school taxes.
Of the more than 200 tax exemptions granted by the State of New York, STAR is the only one actually funded by the state. Called a tax cut when initiated as part of former Gov. Pataki’s 1997-1998 state budget, STAR is fundamentally a tax shift from residential homeowners to those property owners who are ineligible under the program, including renters, owners of industrial or commercial properties, and second and vacation homeowners.
Condominium and cooperative owners are eligible under STAR if a unit is their primary residence. Residents are required to apply individually in order to receive this exemption. Worried that STAR would encourage school districts to spend more, Gov. Pataki included a school tax cap provision in the original legislation, but the Legislature uncoupled the provisions and only passed the STAR exemption. The further enhanced STAR was partially motivated to encourage senior citizens to support their local school budget votes.
At its inception in 1998, the program cost the state $582 million. In the 2010-2011 budget, $3.2 billion was expended for STAR benefits to 3.4 million residents making it the largest state exemption program by a wide margin.
STAR monies are sent directly to local school districts thereby running counter to the distribution of most state education aid. Districts with the highest potential for financing public education also receive proportionately the most property tax relief under STAR.
When traditional formulas are used, state education aid is targeted more heavily to low wealth districts. STAR relief flows more towards wealthier communities because, by design, STAR concentrates its rewards in districts with high levels of homeownership.
As illustration, while approximately 70 percent of residents throughout New York City are homeowners, just 35 percent of New York City residents own their residences, making 65 percent of the city population ineligible for STAR.
While the STAR program remains immensely popular among state politicians in both parties, the new procedures are the result of conclusions in the audit of the program by the state attorney general this past February. The audit determined that fully 20 percent of those on the STAR program were ineligible for the benefits, translating into a loss of $13 million in state monies just this past year.
State officials agree that the data demonstrates rampant double-dipping and abuses. The two most pervasive problems are multiple property exemptions by one owner in New York and using two states as a primary residence.
Local assessors simply lack the state database to find double dippers. The problem is further exacerbated because the exemption does not have unique identifiers for tracking ease such as those employed in Florida. It is hoped that the centralization of the STAR data will minimize the very large incidence of abuse that is costing taxpayers dearly.
For additional information, you can call 518-457-2036 or go to www.tax.ny.gov.