Long Islanders will once again receive rebates from the state’s school tax relief program this fall, but if you ask the authors of a recent study, these rebates will make it harder for first-time homebuyers to buy a home. It is said that it has become.
Property tax relief programs across the country, such as New York’s STAR, lower costs for existing owners, making them less willing to forgo the benefits and sell their homes, according to a study to be published in the next issue of the National Tax Journal. . .
This paper analyzed how property tax relief affects housing affordability.
Co-author Cameron Lapointe, professor of finance at Yale School of Management, said the findings encourage policymakers to carefully consider the impact of property tax relief programs when creating or continuing them. He said that he has shown reasons why this should be done.
“The clear conclusion from our paper is that these local property tax relief measures are taxing older people at the expense of younger and future homeowners who are still renting and trying to get on the housing ladder. That tends to benefit existing homeowners,” Lapointe told Newsday.
This paper takes a close look at property tax programs across the United States, and although it does not directly examine this program, it is relevant to New York’s STAR.
Homeowners in New York receive STAR funds through tax credits or exemptions. The credit will be sent by check or direct deposit, and homeowners who enrolled before 2015 will receive an exemption to reduce their school taxes, according to the state Department of Taxation and Finance.
Savings from Long Islanders’ STAR credits or exemptions can range from a few dollars to thousands of dollars, depending on the taxpayer’s school district, age, and income. Seniors who meet income requirements may qualify for increased benefits. There are other exemptions for veterans and people with disabilities.
Gov. Kathy Hochul announced last month that New York state taxpayers would receive $2.3 billion from the STAR program, including $736 million that would go to about 596,000 households on Long Island. This equates to an average of $1,236 per household.
Local policy experts told Newsday that tax relief programs could increase home prices, but could help lawmakers make housing more accessible without targeting popular programs that are not a political starting point. He said there are other methods that could be considered to make it easier.
Long Islanders pay some of the highest property taxes in the country. Nassau and Suffolk were among 15 U.S. counties with median property tax payments of more than $10,000, according to an analysis of census data by the Tax Foundation, a Washington, D.C., think tank.
Thirteen of these counties were in New York or New Jersey, and the others were Marin County, California, and Falls Church, Virginia.
Lawrence Levy, executive director of Hofstra University’s National Center for Suburban Studies, said when it comes to property tax relief, it all depends on one’s perspective.
He said homeowners, who make up the majority of households on Long Island, want lower taxes and the potential for lower taxes to increase home values, according to the paper.
Potential homebuyers make up a much smaller percentage of the population, but they want affordable housing. Of course, you can qualify for STAR after your purchase.
In any case, Levy said it’s unlikely that lawmakers will make any changes to STAR.
“It’s not likely to increase because it’s now something people rely on,” he said.
Richard Murdko, an adjunct professor at Stony Brook University who teaches courses on planning and economic development, said rebates are open to criticism for “erasing” the issue of tax increases without addressing the cost drivers. He said there is. But there are also more significant obstacles that plague first-time homebuyers, such as a lack of housing options.
“If we start to worry so much about giving seniors and veterans a property tax exemption, we’re collectively doing something wrong,” Murdko said. “There are much larger issues and cost factors that stop the transfer of assets from one generation to another.”
EJ McMahon, an adjunct fellow at the Manhattan Policy Institute who writes about New York state tax policy, agreed with the authors’ finding that property tax relief programs give owners a reason to stay in their homes.
“There is no question that the enhanced STAR tax relief effectively gives many seniors an additional financial incentive to remain in their oversized empty nesters,” McMahon said.
But he noted that programs in other states have a greater impact on affordability because New Yorkers can reapply for STAR if they move to a new primary residence.
For example, California’s Proposition 13 gives owners greater incentive to stay in their homes, he said. Under this program, buyers lock in their property tax assessment at the time of purchase, with limits on annual tax increases.
McMahon said that on Long Island, housing affordability is “primarily a matter of supply and demand, and STAR is a secondary contributor.”
STAR When will I receive my check?
Property owners can find information about rebate delivery at www.tax.ny.gov/pit/property/credit-lookup.htm.
Information regarding delivery dates by district can be found at www8.tax.ny.gov/SCDS/scdsGateway.
The state began issuing STAR credits to taxpayers in most Nassau school districts on Oct. 15. Taxpayers in most Suffolk school districts will begin receiving rebates in early December, according to the state Department of Taxation and Finance’s website.
Jonathan LaMantia covers Long Island residential real estate and other business news. He previously ran the healthcare business for Crain’s New York business.
