Posted by Doug Turetsky, December 9, 2013
New York City homeowners may be letting millions of dollars in state property tax breaks slip away. For the first time since the state enacted the STAR tax abatement 15 years ago, homeowners, including coop and condo apartment owners, are required to register with the state in order to receive the tax break in the upcoming fiscal year. With the registration deadline of December 31 fast-approaching, only about half of New York City homeowners receiving the tax break this year have registered—well below the statewide average of 66 percent.
The tax break, known formally as Basic STAR, will be worth about $300 to each eligible city household in 2015. Using state Department of Taxation and Finance figures for the number of households that have not registered as of November 26 and the city’s property tax assessment roll, IBO’s Ana Champeny estimates that about 250,000 city households have not yet registered. That would leave about $75 million in potential property tax savings unclaimed by city residents next year. This tax break is a state expense and comes at no cost to the city budget.
Senior citizen homeowners who receive what is known as Enhanced STAR don’t need to register. There are nearly 100,000 New York City households receiving the Enhanced STAR property tax break.
More than 3 million properties currently receive the Basic or Enhanced STAR exemption statewide. In recent years the tax break has cost the state more than $3 billion annually.
The county with the highest registration rate in the state is Saratoga, where 83 percent of current STAR recipients have registered. The rates in the city’s five boroughs pale in comparison. The highest is Staten Island at 64 percent, the lowest is the Bronx at 47 percent. Brooklyn is at 50 percent, Queens 52 percent, and Manhattan 53 percent. Citywide the rate is 53 percent.
Homeowners are only supposed to receive the STAR benefit for one property. Until now, the program operated on the honor system, with the state tax department assuming owners of two or more properties were only claiming STAR once. But an audit released earlier this year by state Comptroller Thomas DiNapoli found that about a fifth of the claims for STAR were in fact ineligible for the tax break. Most of the ineligible exemptions identified by the state Comptroller were for “double-dipping”—homeowners receiving the exemption for properties that were not their primary residence. Other improper exemptions included homes that received the tax break even though they were in foreclosure.
The state implemented the registration system this year so tax department assessors could start tracking whether a homeowner was claiming a STAR tax break for more than one property and to help identify other improper claims. The prevention of duplicate claims by one homeowner may explain in part why registration numbers are lagging in New York City. The STAR property tax break is worth more outside the city, so homeowners with multiple properties may be choosing to register for their homes outside the five boroughs.
The state first alerted New York homeowners to the new registration requirement in August and sent another mailing in September. In late November the state sent postcards to homeowners urging them to “Register Now,” with a particular focus on New York City. Registration can be done online at www.tax.ny.gov/pit/property/star13/default.htm or by calling 518-457-2036.