Even if Dolly Lenz doesn’t believe that de Blasio will “kill the goose who laid the golden egg,” there has been much terrified speculation in the real estate industry about what impact the mayor-elect will have on the real estate market. Still, before pitching a fit about potential tax hikes, New York City homeowners would do well to take advantage of the tax breaks that are currently available to them.
Only half of New York City residents currently receiving the Basic STAR state property tax break this year have registered to receive the break this coming year, according to the Independent Budget Office—far below the statewide average of 66 percent. In order to receive the benefit, homeowners must register by December 31.
This is the first year that residents must register for the 15-year-old tax break, which is available for primary residences whose owners make less than $500,000. For individuals, the tax break is relatively modest; it exempts the first $30,000 of the full value of a home from school taxes and and, on average, saves New York State residents $300 a year.
However, the tax break costs the state more than $3 billion annually, with more than 3 million properties receiving the benefit, and after an audit this year, the state found that about a fifth of homeowners claiming the STAR tax break were ineligible for it—i.e., receiving tax breaks on more than one property, or a property that was not their primary residence. The registration system was implemented so that the state tax department could track applicants and identify homeowners who were trying to double dip. (Enhanced STAR recipients—those 65 or older with qualifying incomes—will continue to receive the benefit without registering.)
And while 83 percent of current STAR recipients have registered in Saratoga county, the citywide average is 53 percent, with 64 percent of Staten Islanders, 50 percent of Brooklynites, 52 percent of Queens residents, 53 percent of Manhattanites and only 47 percent of Bronx residents having registered, according to the IBO.
The IBO speculates that the reduced number of applicants could be attributed to the fact that the tax break is worth more outside the city, leading those with multiple homes to register non-New York City properties. (Although the ability to keep a New York pied-a-terre mandates a fairly large income in the first place, which may put those homeowners above the $500,000 income cap.)