Co-op Boards Shouldn't Reach for Their Shareholders' STAR Rebates

Feb. 3, 2016 — New York State’s School Tax Relief Program, or STAR, is designed to give a rebate on school taxes to homeowners who make $500,000 or less a year, and to senior citizen homeowners who makes less than $84,550. Many co-op boards have treated the STAR rebates the same way they treat abatements under the Cooperative and Condominium Tax Abatement Program – that is, they levy an assessment on shareholders equal to the rebate and abatement. Other boards pool the STAR rebates, distribute the benefits to all shareholders, then assess that amount. The shareholders suffer no pain (or gain), while the co-op gets a valuable revenue infusion.

But boards who snatch the STAR rebates are over-reaching, attorney Steve Wagner, a partner in the firm Wagner Berkow, tells Brick Underground. “The law mandates the cooperative and/or its managing agent to administer the tax rebate and to credit the STAR tax exemption only to those tenant shareholders who qualify for the exemption,” Wagner says.

Only shareholders who use the apartment as their primary residence qualify for STAR rebates and the abatements. The New York State Department of Taxation and Finance has strict rules on how co-ops should handle STAR rebates.

Make sure your board isn't practicing fuzzy math.