Progress Update: Building 2 Ready for PourApril 19, 2016
Lynnwood Open HousesApril 28, 2016
Recently New York State approved the 2016/2017 fiscal year budget. As part of that budget, NYS approved transitioning the current STAR exemption to a personal income tax (PIT) credit. This transition will apply to anyone who did not have a STAR exemption on the 2015 Assessment Roll. Purchasers of a personal “primary” home on or after March 2, 2015, will be impacted by this change.
The amount of reduction that would have been applied directly to the school tax bill as a result of the Basic STAR exemption has been eliminated. It is our understanding that a property owner may apply to the NYS Department of Taxation and Finance for an advance payment of the credit for the current tax year (2016), and in subsequent years the homeowner would apply for a personal income tax credit on their NYS Income Tax Return when they file.
Current STAR recipients are not impacted as long as they remain in their current residence.
In some cases, the homeowner’s escrow account may have been established considering the STAR direct tax reduction with monthly payments established to allow for adequate funds to pay the reduced tax bill. If that is the case, escrow accounts may experience a shortage of funds needed to pay the upcoming School tax bill. In addition, since this direct reduction of tax has been transitioned to a personal income tax credit, monthly payments will need to be increased to prepare for future increased tax bills without the reduction of STAR directly from the bill. Some of the issues that this change raises are:
- shortages in escrow accounts
- large payment increases due to shortages and collecting for a higher amount for future years
- increased loan delinquencies as a result of “payment shock”
- reduced income to school districts if shortages are not advanced by banks
- borrowers not “qualifying” for home loans as a result of the increased monthly costs