ITHACA, NY – While the new New York State budget brought some boons like its generous family paid leave program, it’s also bring some minor headaches for some.
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Note that this change will only affect people who purchased property after March 2, 2015 and just applied for the STAR rebate this year. It will also apply to any other new property purchase going forward.
One of the changes of the budget involves a change to the way that the STAR (School Tax Relief) program works. This program provides a tax cut for school taxes for households with an income under $500,000.
Statewide, the average yearly savings from the STAR program per homeowner was $737 in 2015, according to a Syracuse.com report. Senior citizens may be eligible for Advanced STAR, which carries an even bigger cut.
Originally, the STAR program provided a direct cut to school taxes that the state would later refund to the schools. It will continue to work this way for people who have already been receiving the STAR exemption on their current property.
Under the new paradigm, the STAR program will be applied as an income tax credit. Properties purchased in the first half of a year (Jan 1 through July 1) may be eligible for a rebate during the current tax year, rather than waiting for the tax credit.
Due to the unfortunate timing of the budget decision, this means that people who had newly applied for the STAR program after buying a new property and were approved will likely be receiving letters retroactively denying that approval.
The Tompkins County Assessor’s office estimates that they’ll be sending out approximately 1,000 such denial letters. They also advise those affected by this to consult with their accountant or, their lending institution if they have an escrow account.
So quick recap:
- If you’ve already been receiving the STAR exemption in previous years, nothing changes until you move.
- If you’re a new homeowner and applied for the STAR exemption in the past year, you’ll likely be getting a retro-active rejection letter.
- In that case, you’ll have to contact the New York State Department of Tax and Finance, who will either send you a rebate check for this year’s STAR savings or allow you to claim it as an income tax credit.
- Going forward, new homeowners will always use the new income tax credit method rather than receiving a direct tax break.
- The amount of the savings isn’t changing — just the method.
So why make this changes? Essentially, because it means the state government can “spend” less, as they’re not paying the difference of the tax cut back to the schools. Of course they’ll also be taking in less thanks to the income tax credits.
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