Property Tax Rebate to total $250M a year

By Lois Weiss | October 15, 2007 11:47AM

Some homeowners could see a three-year property tax rebate under the city’s proposed budget agreement. That must still be approved by the New York State Assembly, which may balk at the $250 million annual cost of the measure.

Resident owners of Class One homes, Class One condos and Class Two condos and co-ops would see a $400 rebate, as would other primary resident owners.

Two items in the proposed legislation would keep the rebate from affecting a wider range of property classes, and the Real Estate Board of New York is lobbying for their inclusion.

The rebate also appears to be the carrot to help the city sign up about 70,000 “missing” prime residents for the School Tax Abatement Program, or STAR, so they would not be impacted by future imposition of the absentee owner tax.

The rebate will be based on payments of current fiscal 2004 taxes, but owners would receive their checks in fiscal 2005, probably in September or October, though the money could arrive even later, the city says.

According to the Department of Finance, if you already signed up for STAR, you will get the rebate. Mitchell Lama and Housing Development Fund Corporation (HDFC) residents, however, have been excluded from this rebate program.

Those people who count a New York City home or condo as their primary residence and who have not yet signed up for STAR now have until August 31 to sign up and receive the new rebate. If you buy a home on August 1, you can also get the rebate on the fiscal 2003/2004 taxes, even if the former owner paid them – unless other arrangements are made.

Each year, the rebate money will be paid out of the current fiscal year for the prior year’s taxes. Since the first budgetary impact will be in fiscal 2005, the money will become a deduction for the city from all property tax revenue and have no effect on the levy, class shares or tax rates, and be administered somewhat like the co-op/condo abatement.

The law is written, however, so those eligible with bills are less than $400, will get the lesser of $400 or the total tax. If you are delinquent by $25 or more, you also won’t be eligible for the rebate. The rebate will also not be credited against taxes owed.

According to Real Estate Board of New York President Steve Spinola, changes were made in the bill at the last minute, so that in no year in which the real estate tax rate is increased, can a rebate be issued. That means if the average tax rate is increased, a rebate cannot be issued.

There is also language that the city cannot request a continuation of the rebate without a reduction equal to the fiscal impact of the rebate shared with the rest of the tax classes. In other words, the tax rate would have to be reduced for all the classes, so the entire package would reduce taxes by $750 million plus the $250 million to Class One.

“We still don’t know if the State Senate will go along with and it is tied up,” said Spinola.