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STAR Exemption Program Changes

May 16, 2016

Governor Cuomo’s 2016-17 Budget has passed, as well as the enactment of several pieces of legislation to implement the budget’s fiscal plan, resulting in the STAR exemption program undergoing some significant changes.

As I am sure you all are aware, the STAR exemption gives homeowners a reduction in the amount of school taxes that are assessed to their property. Pretty much every homeowner was entitled to the exemption and a mere filing of a one-time application was required. An enhanced or increased exemption amount was available to seniors upon a yearly submission of proof of their income and meeting of income limitations.

Beginning with the assessment rolls used to levy school taxes for the 2016-17 school year, an exemption will no longer be available to those individuals who purchase a home after the taxable status date applicable for that school year (March 2, 2016). Those individuals will be entitled to claim a tax credit on their personal income tax returns. The amount of the STAR benefit will not change, only the mechanism for receiving it.

In addition, the tax commissioner is empowered to determine that an advance credit may be provided to the homeowner. If he so determines he will notify the school district of such determination and the amount of the credit and the school district will include a statement on the tax bill that “A STAR reimbursement check of $_______ will be mailed to you upon issuance by the NYS Tax Department.” The legislation does not give any guidelines as to how the commissioner would decide to grant an advance credit.

Individuals that were already homeowners prior to the cutoff date and were receiving the STAR exemption will continue to receive that exemption unless they elect to renounce the exemption and apply for the tax credit instead. All owners must join in this irrevocable renunciation.

The legislation also allows for late filing of the enhanced STAR exemption renewal application for cases of hardship, such as serious illness or hospitalization of the taxpayer or an immediate family member. In such cases, the renewal applications, with a letter of explanation as to the delay, can be filed as late as the last day to pay the school taxes without interest.

There was also some indication that the Income Verification Program (IVP) relative to the senior enhanced STAR exemption will be made mandatory but there is no indication as to whether that will occur or not at this time. This program allows seniors to give the assessor authorization to verify their income directly with the Department of Taxation and Finance and eliminates the need to apply annually with proof of income.