Q&A: It’s in the STAR’s Q&A:It’s in the STAR’s

Q I've heard a lot about the STAR abatement and other tax breaks for apartment owners, but I'm confused as to who gets what, and how those refunds are distributed among residents in multifamily buildings. Could you please clarify the most important programs, and give some tips about how to maximize your refund?

—Hopeful in Harlem

A “Tax benefits to apartment owners in New York City are classified into two main categories: exemptions and abatements,” says Pierre E. Debbas, a partner and founding member of Romer Debbas, LLP, a law firm in Manhattan. “Exemptions lower your tax obligation by reducing your property’s assessed value for tax purposes. Abatements lower your taxes by applying credits to your tax obligation.

“The New York State School Tax Relief Program (“STAR”) provides qualifying individuals with an exemption from school property taxes. There are two types of STAR exemptions, Basic and Enhanced.

“In order to qualify for the Basic STAR, an individual must own property that is their primary residence and the resident owner (and their spouse) must have an income of less than $500,000.00. If these conditions are met, then $30,000 of the value of the residence is exempted from school taxes.

“The Enhanced STAR applies to senior citizens age 65 and older with an income cap of $83,300 for an owner and their spouse. Like the Basic STAR, the residence must be owned as a primary residence by at least one owner. For 2014-2015, $64,200 of the value of the property is exempted from school taxes under the Enhanced STAR.

“Condominium or cooperative unit owners in buildings with 3 or more units may qualify for the Cooperative and Condominium Tax Abatement program. This abatement reduces the property taxes of a co-op/condo based on the average assessed value of the residential units in the building. For buildings assessed at $60,001 or more, the abatement percentage for 2014-2015 is 17.5%. This abatement was extended in 2013 until June 30, 2015. The 2013 extension introduced several requirements and restrictions to the abatement program. Most significantly, the city requires that owners must use their apartment as a primary residence in order to qualify for the abatement moving forward. As such, pied-a-terre’s and investment properties will no longer qualify for the Co-op/Condo Abatement.

“In the case of many co-op buildings, it is important to note that the STAR and Co-op/Condo tax abatements are “recaptured” by the building via an assessment to owners in an amount roughly equal to the abatement amount.”

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