Summer is finally here, but school year 2019-2020 is right around the corner and with it comes changes to the School Tax Relief (STAR) program. Property owners all over New York State received letters this month to inform them of the impacts of these changes, based on information they previously supplied for the STAR exemption or STAR credit.

In summary, before 2016, if you owned a primary residence in New York State and had adjusted gross income that was less than $500,000, you were eligible for a property tax exemption. Once you applied for the STAR program with your local assessor’s office, your tax bill would show the assessed value of your property, then a STAR Exemption would be deducted before calculating the tax.

If you purchased your property in 2016 or later, you would have been eligible for a STAR credit, so instead of paying a smaller tax bill you would receive a check the value of which would be generally the same as the property tax exemption. Depending on when you purchased the home, the check would normally come in the same year as you would have received the exemption.

Changes to the rules stated above are occurring now for the 2019-2020 school tax year.

  • The income limitation for the STAR exemption is being reduced to $250,000.
  • The STAR exemption amount has been made permanent, it will never increase.
  • The value of the STAR credit could potentially increase by as much as 2% each year.

If you currently receive the STAR exemption and your income is below $250,000, you can do nothing and continue to receive the exemption on your real estate tax bill. You may decide to switch to the STAR credit instead, as the income limitation on the credit continues to be $500,000 and you may benefit from the potential two percent increases. There is no drawback to switching to the credit, you will never get less than the exemption was saving you.

If your income is more than $250,000, you must switch to the credit to continue receiving benefits.
If your income is $250,000 or less, you have the option to switch to the credit method or continue with the exemption.

New York State sent two different letters to property owners that will be affected by these changes:

  • The first letter (RP-425-RDS) says they have automatically registered you for the Basic STAR credit program and applies to homeowners whose income on their 2017 return was in excess of $250,000. If you agree, nothing needs to be done and they will mail your STAR credit check before the due date of your school tax bill.
  • The second letter (RP-425-RDM) also says they have automatically registered you for the Basic STAR, but they need additional information before they can issue you a check. This letter went to homeowners whose income might be over $500,000, may own a house in another state or if their property is held in the name of a trust. To provide the additional information they are requesting, they instruct you to go to their online registration and register for the STAR Credit. The letter will include a “Property Key” that will need to be entered as part of this process.

With both letters, if you disagree you should respond following the instructions in the letter and you should not delay in responding to this letter to ensure that you receive your check timely.

The Enhanced STAR, which provides an increased benefit for senior citizens age 65 and older, is also experiencing change. If you are applying or reapplying for the Enhanced STAR you will need to enroll in the Income Verification Program (IVP). You will only need to do this once and you will do this at the assessor’s office when you go to apply or renew. You will complete Form RP-425-IVP and either Form RP-425-E if you are upgrading from Basic STAR to Enhanced STAR or RP-425-Rnw if you are renewing your Enhanced STAR exemption. Once you are registered with IVP, you won’t have to renew your Enhanced STAR or worry about missing the renewal date and you won’t have to provide a copy of your tax return to the assessor’s office anymore.

Visit www.tax.ny.gov and search STAR for additional information. If you don’t have access to a computer, call New York State Tax Department (not your local assessor) at 518-457-2036 between the hours of 8:30 p.m. – 4:30 p.m.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.


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