Pease And Gustafson LLP

New York’s Property Tax Freeze Credit

Posted on: September 9th, 2014 No Comments

Earlier this year, the NY Legislature approved a property tax freeze as part of the 2015 State Budget, resulting in changes to several laws including the General Municipal Law, Real Property Tax Law, and the Tax Law.

In brief, the property tax freeze targets taxes on the primary residences of home-owners with a STAR exemption located in municipalities where local governments and school districts have approved budgets that do not exceed the property tax cap (the “Tax Cap”). This freeze becomes effective for school districts starting with the 2014-15 school year, and for municipalities and special districts in fiscal years beginning in 2015 (deadline is January 21, 2015 for most local governments).

To receive the tax credit in the 2nd year, school districts and local governments must stay within the Tax Cap and develop efficiency plans for sharing or consolidating services that will achieve savings for taxpayers. These plans are due to the Division of the Budget by June 1, 2015 with full implementation of such plans by the end of the local fiscal year of 2017. Under §3-d(4) of the General Municipal Law, “it is anticipated that the county government or board of cooperative educational services will …facilitate a process and submit a county wide or board of cooperative educational services region wide plan for approval.” Section 3-d(4) further states that “local governments are strongly encouraged to develop a single government efficiency plan for all of the local government units in their county.”

Under General Municipal Law §3-d(2), upon the adoption of a budget that does not exceed the Tax Cap, and no later than the 21st day of the applicable fiscal year, the executive officer or budget officer of the municipality or school district must certify such to the state Comptroller and the Commissioner of the Department of Taxation and Finance (the “Commissioner”).

To the extent the above criteria are satisfied, a home-owner will be allowed a credit against taxes equal to the greater of: (1) the increase in taxes for the home-owner (excluding increases due to construction, removal or reduction of exemptions, or reassessments that increase assessed value in excess of the “typical” increase in that locality) or (2) the prior year taxes for such home-owner multiplied by the allowable levy growth factor.* The credit will equal the two-year increase in taxes if the “taxing jurisdiction” met the eligibility requirements for both years.

Further, under Real Property Tax Law (RPTL) §1590(1), local governments (excludes school districts and villages) will be required to annually submit to the Commissioner the data files that are used to create the tentative and final assessment tax rolls and summaries of the information from the final assessment roll. Such data files will be due no later than 10 days from the time of filing the tentative or final assessment roll.

Lastly, under RPTL §1590(3), each local government must submit to the Commissioner the data files used to prepare its tax rolls and tax bills no later than ten days after the annexation of the warrant for the collection of taxes for the applicable fiscal year, or where no such warrant is annexed, no later than ten days after the last date prescribed by law for the levy of taxes of the applicable fiscal year.

Please contact us to discuss any questions you may have regarding the new laws and the process surrounding the property tax credit.

* Note that in the case of property consisting of a mobile home, an eligible home-owner will be allowed a credit in the amount equal to 25% of the average credit for such taxing jurisdiction. See NY Tax Law § 606(bbb).

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