STAR Tax Credit in NYC: What Every Buyer & Seller Should Know
STAR Tax Credit in NYC: What Every Buyer & Seller Should Know
Navigating property taxes in New York City can be complex, but there are valuable programs designed to help homeowners. The most significant of these is the School Tax Relief (STAR) program, a New York State initiative that can save you hundreds, or even thousands, of dollars each year.
While the name might sound simple, the program has evolved, leading to some common misconceptions. As your trusted partner in NYC real estate, Yeo Real Estate has broken down everything you need to know about the STAR tax credit, from who qualifies to how to apply.
What is the STAR Program?
The STAR program is a New York State benefit that provides property tax relief to eligible homeowners on their primary residence. It reduces your school tax bill, which in New York City is a component of your overall property tax. It is important to note that STAR applies only to school taxes, not to other taxes levied by the city or county.
The program has two main parts:
STAR Exemption: This is a direct reduction on your tax bill. This benefit is now closed to all new homeowners. If you purchased your home after May 1, 2015, you cannot apply for the exemption.
STAR Credit: This is a benefit in the form of a check or direct deposit sent to you directly from New York State. All new homeowners must apply for the STAR credit, not the exemption.
This is a critical distinction, as the value of the STAR credit can increase by up to 2% each year, while the exemption's value remains fixed. For this reason, even many long-time homeowners who have the exemption have opted to switch to the credit to maximize their savings.
Who Qualifies for STAR? A Detailed Breakdown
To be eligible for a STAR benefit, your property must be your primary residence. Beyond that, qualification depends on your household income and, for the Enhanced STAR, your age.
Here's a look at the two tiers of the program:
Basic STAR
The Basic STAR benefit is available to most homeowners.
Eligibility Requirements:
Ownership & Residency: You must own your home and it must be your primary residence. The benefit is available for houses, condominiums, co-ops, mobile homes, and farmhouses.
Income: The combined adjusted gross income of all owners and their spouses living at the property must be $500,000 or less.
Age: There is no age restriction for the Basic STAR credit.
Enhanced STAR
The Enhanced STAR benefit offers a greater property tax savings and is designed for senior citizens with lower incomes.
Eligibility Requirements:
Ownership & Residency: The property must be the primary residence of at least one age-eligible owner.
Age: All owners of the property (except spouses or siblings) must be at least 65 years old as of December 31st of the year for which the benefit is being applied.
Income: The combined adjusted gross income of all owners (resident and non-resident) and any owner's spouse who lives on the property must be below a certain limit, which changes annually. For the most up-to-date information, it's best to check the NYS Department of Taxation and Finance website.
Table of STAR Benefits at a Glance:
Feature | Basic STAR | Enhanced STAR |
Who it's for | All eligible homeowners | Senior homeowners |
Age Requirement | No age restriction | All owners must be 65+ (with exceptions for couples/siblings) |
Income Limit | $500,000 or less | Varies by year, typically around $100,000 or less |
Benefit Type | Check or direct deposit | Check or direct deposit (larger amount) |
Benefit Amount | Based on an exemption of the first ~$30,000 of your home's value | Based on an exemption of the first ~$70,000 of your home's value |
The Application Process: How to Apply for STAR
The process for applying for the STAR benefit has been streamlined and is handled directly by New York State, not your local NYC assessor's office.
Step-by-Step Guide for New Homeowners
If you've just purchased a new home and have never received the STAR benefit, here is a simple guide to get you started:
Gather Your Information: You will need the names and Social Security numbers for all owners of the property and their spouses, the name of your school district, and your most recent federal or state income tax return.
Register Online: The easiest way to apply is to register online through the New York State Department of Taxation and Finance's Homeowner Benefit Portal. You can access this portal by visiting tax.ny.gov/star.
Complete the Registration: The portal will walk you through a series of questions to verify your eligibility. You will be asked about your income and residency to determine if you qualify for the Basic or Enhanced STAR credit.
Receive Your Benefit: Once your application is approved, you will automatically receive a STAR credit check or direct deposit from New York State each year, as long as you remain eligible.
You only need to register once. New York State will automatically review your income eligibility each year by checking your income tax returns.
Upgrading from Basic to Enhanced STAR
If you currently receive the Basic STAR benefit and are now eligible for the Enhanced STAR (e.g., you turned 65 and meet the income requirement), the process is now automatic. New York State will notify your assessor when you become eligible, so you no longer have to submit a separate application to upgrade. This simplifies the process for thousands of seniors.
Tips & Takeaways
Check for Eligibility: The STAR program is one of the most valuable benefits available to NYC homeowners. If you are a new homeowner, or you are unsure if you are currently receiving the benefit, check the New York State Department of Taxation and Finance's website.
STAR vs. Other Abatements: Don't confuse the STAR program with other NYC tax abatements like the Co-op and Condo Tax Abatement or the 421a program. STAR is a statewide program based on income and residency, while others are specific to building type or location.
Mind Your Income Taxes: If you itemize deductions on your federal or state income tax return, the STAR credit you receive must be reported as a negative value on your Schedule A to accurately reflect your property tax deduction.
The Benefit is Real: A Basic STAR credit can save you hundreds of dollars annually, while the Enhanced STAR credit can save you even more. It's a significant financial benefit that every eligible homeowner should take advantage of.
At Yeo Real Estate, we believe in providing our clients with the knowledge they need to make smart financial decisions. Understanding property taxes and available benefits like the STAR program is a key part of that. If you are considering buying or selling a home in New York City and have questions about the process, we're here to help. Contact us today to learn more about how we can guide you through every step of your real estate journey.