Many city homeowners entitled to tax relief under the state's School Tax Relief (STAR) program have until January 5, 2000, to apply to receive benefits for the 2000-2001 tax year. Sign up information is provided below.
A recent IBO study found that in the last two years, New York City homeowners missed out on $69 million in property tax savings because roughly 40 percent of city homeowners, including owners of coop and condo apartments, who were entitled to STAR tax relief did not participate.
Enacted in 1997, STAR cuts local property taxes statewide and personal income taxes in New York City and uses state funds to reimburse local school districts for the lost local tax revenue. This mechanism shifts a portion of local education tax burdens from individual school districts to the state.
The STAR property tax cut consists of an enhanced exemption for senior citizen homeowners with incomes less than $60,000, and a smaller basic exemption, available to all other homeowners. The enhanced exemption for seniors was fully implemented in 1998-1999, with an expected average benefit of $341 per household in 2000-2001. In contrast, the basic exemption is being phased-in over three years beginning in 1999-2000, with an average benefit of $137 in 2000-2001 growing to $210 when fully implemented.
IBO found that in the program's first year, only 57 percent of New York City seniors eligible for the enhanced exemption applied for and received the tax benefit. In the second year, participation among eligible seniors grew slightly, to 64 percent, but only 50 percent of those households eligible for the newly available basic benefit participated. IBO estimates that 380,700 qualified New York City homeowners missed out on the savings this year. Barring a significant increase in program participation, total savings lost by city homeowners will grow over the next two years as the full value of the basic benefit is phased in.
Elsewhere in the state, STAR participation was much higher. In the first year of the program (the only year with complete statewide data available), participation among eligible seniors averaged 88 percent.
Even if all eligible city homeowners participated, the city would receive a disproportionately low share of STAR benefits. This is because the financing mechanism behind STAR works to redistribute state personal income tax receipts-40 percent of which come from city residents-to school districts with high residential property taxes, such as those in the city's suburbs. The difference in participation rates between the city and the rest of the state compounds this loss to city homeowners.
Sign up Information:
The STAR exemption is available to owners who use the property as their primary residence. Homeowners not currently receiving the exemption have until January 5th to apply to the city's Department of Finance in order to receive the benefit for the 2000-2001 tax year. (There is no way to apply for missed benefits from prior years.) In order to continue receiving benefits, senior citizens currently receiving the enhanced exemption need to certify that they continue to meet the income qualifications. In October, certification forms were mailed to all seniors currently receiving an enhanced exemption; this form must be returned by January 5th as well. Homeowners currently receiving the basic exemption do not need to file in order to maintain their benefits.
Applications and certifications must be filed using pre-printed forms prepared by the Department of Finance in response to requests from taxpayers. When requesting forms, the taxpayer must know the building address as well as tax block and lot numbers. Forms may be requested through any of the following means:
- call the taxpayer assistance hotline: 718-935-9500
- write:
New York City Department of Finance
STAR Exemption Program
50 Lafayette Street, Room B2
New York, NY 10013-4045
- e-mail the department at: Starex@doflan.ci.nyc.ny.us
Additional information and instructions are available at the Department of Finance's STAR web page: http://www.ci.nyc.ny.us/html/dof/html/starex99.html.
IBO has published a number of studies about STAR. The latest, a conference paper, is available in the publications section of our website (Publications). For additional information about STAR in New York City, contact Lisa Melamed (212-442-8618, lisas@ibo.nyc.ny.us) or George Sweeting (212-442-8642, georges@ibo.nyc.ny.us).
IBO is an independent city agency whose mission is to provide non-partisan budgetary, economic and policy analysis for the residents of New York City and their elected officials, and to increase New Yorkers' understanding of and participation in the budget process.
