We wanted to let you know of a major
change to the New York State School Tax Relief Exemption, also known as “STAR,”
that will be taking effect under the New York State 2013-14 budget.
To summarize what we have below, here’s what
you need to know:
Starting with the 2014-15 tax
year, homeowners will have to file every year for the STAR exemption.
If you already have the STAR
exemption, you don’t have to do anything right now to get the exemption for the
2013-14 tax year, but you will need to file a new application by April 1, 2014
for the 2014-15 tax year, and every year thereafter.
If you’re unfamiliar with STAR,
the post below explains the basic contours of the STAR program, the benefits of
STAR, and how to apply for it.
At the end of this post, you’ll also see
links to the New York State primary sources where you can download the
application form and get more information.
The STAR program is a rebate to your school
taxes that applies to most New York State homeowners that meet certain income
eligibility restrictions, and can be claimed by filing a very simple form that
you can complete in about ten minutes. New York provides for two types of STAR exemptions: the “Basic STAR” and
the “Enhanced STAR.” The main difference
is that basic STAR applies to all homeowners regardless of age, while the
Enhanced STAR applies only to homeowners who are 65 years of age or older. Enhanced STAR has more restrictive income
restrictions, but does provide a somewhat larger tax rebate for eligible
Essentially, what STAR does is exempt part of
the value of your home from the calculation of your school tax assessment,
thereby reducing the taxes that you’ll have to pay. So, for example, if your home is assessed at
$300,000 and you get an exemption for $30,000, then your property tax burden will
be calculated on a revised assessment of $270,000. The lower your assessment, the lower your tax
burden, so the exemption will probably save you a few hundred dollars or so
every year. The exemption varies by
municipality, but is generally around $30,000 or so. (You can check your municipality’s exemptions online at the link provided
on the links section on this page.)
the New Rule?
The key change is simple: from now on,
homeowners will have to file a new application EVERY
year in order to claim the exemption.
Under prior law, you could file the application for basic STAR once, and
claim the exemption every year. Now,
Basic STAR will be treated like the Enhanced STAR, requiring homeowners to file
an application every year by April 1 in order to claim the exemption for the
upcoming tax year.
Why the change? Essentially, what happened is that an audit
of the program showed that many
people have been abusing the system, receiving improper tax benefits for
second homes and rental properties. For
example, just in Rockland County, an investigation by DA Tom Zugibe revealed
that more than 500 property owners were illegally getting the rebates, claiming
$671,000 in revenue. As the Journal
figures represent the tip of the iceberg,” District Attorney Thomas Zugibe
said. “Those who double-dip STAR exemptions are cheating the system, at a time
when the state’s finite resources are of critical importance.”
and several town officials said Rockland is the only county so far tracking
STAR fraud, extrapolating that fraud is much more than the initial discovery of
516 property owners, including 75 people who live outside the state and
Gov. Andrew Cuomo has proposed an anti-fraud program that will
allow for statewide registration for STAR based on income-tax returns and for
the Department of Taxation and Finance to oversee the program in conjunction
with the efforts of local tax assessors. The office has projected $50 million
Luckily, filing for the STAR exemption is
pretty simple, so read on.
The STAR exemption applies to any type of
home, whether it’s a condo,
coop, manufactured home, farmhouse, apartment building or mixed-use property,
so long as the home is owner-occupied.
Both Basic STAR and Enhanced STAR, though, have income eligibility
requirements. Basic STAR restricts the
exemption to homeowners that earned no more than $500,000 on their most recent
federal tax return, including the income for all owners and spouses who live in
the home. For Enhanced STAR, all
homeowners and spouses cannot earn more than $79,050.
In most cases, you’ll just state your income
when you file your STAR application, but your local assessor does have the
authority to require you to prove your income eligibility by providing a copy
of your federal or state income tax return.
Note that the STAR income restrictions are based on your most recent tax
return, not the most recent tax year, which in practice means that your
eligibility depends on your income two years ago, not last year. So, for
example, when you apply for your STAR exemption for your 2013 school taxes,
you’ll base your eligibility on your 2011 tax return that you filed in 2012.
How do you apply?
The STAR exemption
does not run with the property, so you don’t automatically get the rebate if
you buy a home that already had the exemption.
But getting the exemption is a routine matter. If you are
income-eligible for the STAR exemption, you simply need to file an application
with the state and the rebate will apply toward your school taxes for the next
tax year. The application is called “RP-425: Application for School Tax Relief
(STAR) Exemption) and is very short and straightforward – it simply asks you to
identify your property address, answer a few questions about your income
eligibility, and sign the form. You can
get your application from your Better Homes and Gardens Rand Realty agent, from
your local tax assessor’s office, or at the links section on this page.
You should file
your application as soon as you close on your new home. Depending on when you
close, though, you might not be eligible for the exemption right away. School taxes are generally assessed in the
fall of the year, so you will only start getting the exemption if you file your
application by the spring of that tax year.
In most municipalities, the applications must be postmarked or received
in the assessor’s office by the “Taxable Status Date,” which is usually March
1. That date can vary by town or
village, though, so you should check with your local assessor’s office to get
the local deadline.
Because of the
change in the law starting in 2013, you will need to file for your STAR
exemption every year by April 1 for the upcoming tax year. For people who do not yet have STAR, you
should file the application as soon as possible. Depending on your jurisdiction, you might
still be eligible to claim the exemption for the upcoming tax year. If you
already receive STAR, it looks like you will still get your exemption for the
2013-14 tax year, and do not need to file a new application until April 1, 2014
to claim the exemption for the 2014-15 tax year.
Here are some links that you might find
helpful in applying for the STAR Exemption.
Please note that the state website often shuffles its pages, so if these
links do not work just try Googling “New York State Department of Taxation and
Finance STAR Exemption” and you’ll find the general information page.
To get to the
Department of Taxation and Finance Information Page
To get the RP-425
Application for the STAR Exemption
To check your
To get phone help, you can call the Tax Department at
We hope you find this helpful. If you have any questions, or we can be of
any further service, contact your Better Homes and Gardens Rand Realty agent,
or contact me directly if you need to be set up with a great agent.