A Guide to the STAR Program and NYC Tax Abatement for Condo and Coop Owners - Article Banner

If you own a condo or co-op in New York City, you might be able to lower your property taxes through a program called STAR (School Tax Relief). Started in 1997, STAR helps eligible homeowners reduce the part of their taxes that goes to schools. This program isn’t just for people with houses; condo and co-op owners can get these benefits too.

Based in Upper Manhattan, Harlem Property Management is the authority on co-op and condo building management and is a member of the Real Estate Board of New York (REBNY). We specialize in managing condos, co-ops, and multi-family buildings. In this blog, we’ll explain how the STAR program and another benefit specifically for condo and co-op owners work. 

Understanding the NYC STAR Program

Think of it as a discount on your tax bill. Homeowners have been receiving the STAR exemption between 1997 and 2015, and they can continue to receive it for the same primary residence as long as they remain eligible. Since 2016, new homeowners have been registering for the STAR credit, which provides the same benefit as a rebate check from the New York State Department of Taxation and Finance. 

There are two types of STAR Credits:

  • Basic STAR is for everyone. If you own your home and live in it, and you and your spouse make $500,000 or less a year, you can probably get this discount. While income level is a clear criterion, the full scope of eligibility for the Basic STAR credit involves a combination of factors related to the property, its use, the owner’s residency status, and adherence to the application process.
  • Enhanced STAR is extra help for seniors with a lower income limit. If you’re 65 or older and your household income is below a certain limit (which changes a bit each year and is regulated by the New York State Department of Taxation and Finance), you get a bigger discount than Basic STAR offers.

STAR Benefits for Condominiums and Cooperatives

If you’re a condo or co-op owner in New York City, the STAR program offers a way for individual owners to save on taxes. The calculation of STAR benefits for condo owners is slightly different for those who own co-ops, due to the difference in ownership of these property types.

Condominiums:  You own your apartment outright, plus a share of the building’s common spaces like the lobby or gym. You can apply for STAR, and the credit is calculated. Instead of being based on the value of just your unit, it considers your unit’s share of the building’s total value. This method ensures you get a fair reduction in your school taxes, reflective of your portion of the overall property. 

Cooperatives: You own shares in the company that owns the building, which gives you the right to live in your apartment and, thus, the approach for STAR benefits is a collective one. It is calculated based on the entire building’s assessed value, and then the savings are distributed amongst all shareholders. This could mean lower maintenance fees or even direct rebates for you, depending on how your co-op board decides to allocate the savings. 

Understanding Eligibility Requirements

For an individual unit owner to be eligible, you need to make sure of a few things:

  • The condo or co-op unit must be your primary residence, meaning you live there most of the time.
  • You can’t own more than three residential units in the same development.
  • The unit shouldn’t be owned by a business (like an LLC) or be under certain tax exemptions that are incompatible with this abatement.
  • The individual owner applies for it on their own, and there are specific deadlines to meet, especially concerning when you bought your unit.

The entire building or development also needs to qualify:

  • It must fall under tax class 2, a category for certain types of homes in New York City, but not the regular one- or two-family houses. Instead, it includes places where lots of people live together in one building, like a condo, co-op, or big apartment buildings with lots of renters. 
  • The development can’t be receiving other specific tax benefits that conflict with this abatement.
  • Buildings classified under certain programs (like HDFC or Mitchell-Lama) might not be eligible.
  • The managing agent or board applies on behalf of the entire building.

Role of Managing Agents and Condo and Co-op Boards

While it is up to the individual co-op and condo owners to apply for STAR credits, the responsibility to apply for this other tax abatement falls on the shoulders of managing agents or the co-op/condo boards. They gather all necessary documents and submit the application on behalf of the entire building. This isn’t a one-time deal. The abatement needs to be renewed annually. Managing agents or boards make sure everything is up to date and also submit the renewal application to keep the tax savings coming.

Communication is another crucial part of their role to keep the owners informed. They’ll let owners know if the building is eligible, if the application or renewal has been submitted, and how much might be saved on taxes.

Applying for STAR Benefits

It’s crucial to manage the STAR benefits application effectively. This includes ensuring eligibility, applying for the benefits, and then correctly distributing the savings. Here’s how you can navigate the application processes for both the STAR program and the Cooperative and Condominium Tax Abatement.

Applying for STAR Benefits for Individual Owners

  • Step 1: Check Your Eligibility. Before anything else, make sure you qualify for either Basic or Enhanced STAR benefits. 
  • Step 2: Gather Your Documents. You’ll need proof of ownership, residency, and income. This could include your deed, utility bills, and tax returns.
  • Step 3: Apply Through the Right Channel. For STAR benefits, applications go through the New York State Department of Taxation and Finance or your local assessor’s office. You can find forms and more detailed instructions on their websites.
  • Step 4: Communicate with managing agents or board. While applying for the STAR credit is an individual action, being part of a condo or co-op involves a community aspect. Keeping open lines of communication can contribute to the overall wellbeing and financial health of your building community.

Applying for the Co-op and Condo Tax Abatement for Managing Agents and Boards

  • Step 1: Verify Building Eligibility. Make sure your building qualifies based on its tax class and that it’s not receiving incompatible benefits.
  • Step 2: Collect Necessary Information. You’ll need detailed info about the building and each eligible unit, including ownership and residency status.
  • Step 3: Use the NYC Department of Finance’s  Cooperative Condominium Abatement Portal. This online portal is designed for the application and renewal process. It streamlines submitting documents and tracking your application status.
  • Step 4: Keep Up with Renewals. The abatement needs to be renewed annually, This means updating any changes, like new owners, and confirming that your building still qualifies. Mark your calendar for the renewal deadline to ensure continuous benefits for your residents.
  • Step 5: Inform Your Residents. Communicate with the people living in your building about the status of the application and how the abatement will affect their taxes.

One extra applies to larger properties or those with higher average unit values: a “prevailing wage affidavit.” The City will tell you if your building needs to submit this form that confirms the building pays its workers—like janitors and doormen—the standard wage for their jobs in the city. It’s about making sure employees get paid fairly. Submitting this affidavit is a must if your building is required to do so. Without it, you might not qualify for the Cooperative and Condominium Tax Abatement, which means missing out on potential tax savings.

The overall application process requires a bit of coordination and paperwork, mainly handled by managing agents and boards, but the financial benefits can be significant for eligible owners. Tips for maximizing STAR Benefits include:

  1.     Apply Early
  2.     Understand the Benefits
  3.     Ask Questions
  4.     Deadlines Matter: Mark Your Calendar
  5.     Stay on Top of Changes
  6.     Renew On Time

Contact Property Management CompanyIf you are a member of a condo or co-op board or an owner not quite sure how to navigate this complex process, please contact us at Harlem Property Management. We have helped many condos and co-ops navigate the tax abatement process, and we’d be happy to help your community.