Establishes a personal income tax credit for portion of residential real property taxes which exceeds a certain percentage of the household gross income

BILL NUMBER:S137

Title of bill

An act to amend the tax law, in relation to the school district property tax credit and establishing the maximum residential real property, personal income tax credit

Purpose or general idea of bill

To place a limit on the real property tax for certain owners and provide a personal income tax credit for certain property taxpayers.

Summary of specific provisions

SECTION 1: Makes technical amendments to subparagraph (E) of paragraph 1 of subsection (e) of section 606 of the tax law, as amended by chapter 105 of the laws of 2006.

Section 2

Adds a new subsection (ss) to section 606 of the tax law to provide for a real property tax credit. The credit will be based on the income of the household and the percentage that said household pays for real property taxes.

City of New York, and the counties of Nassau, Suffolk, Rockland, Westchester, Putnam, Orange and Dutchess Household Adjusted Gross Income Tax Maximum Real Property Tax

$120,000 or less Real Property taxes paid in excess of 6% of said income can receive a personal income tax credit of 70% of the overage.

$120,001 - $175,000 Real Property taxes paid in excess of 7% of said income can receive a personal income tax credit of 70% of the overage.

$175,001 - $250,000 Real Property taxes paid in excess of 8% of said income can receive a personal income tax credit of 70% of the overage.

$250,001 + No credit.

All other counties in the State Household Adjusted Gross Income Tax Maximum Real Property Tax

$90,000 or less Real Property taxes paid in excess of 6% of said income can receive a personal income tax credit of 70% of the overage.

$90,001 - $150,000 Real Property taxes paid in excess of 7% of said income can receive a personal income tax credit of 70% of of the overage.

$150,001 - $250,000 Real Property taxes paid in excess of 8% of said income can receive a personal income tax credit of 70% of the overage.

$250,001 + No credit.

To qualify, the taxpayer must have resided in the home for not less than five years. Also, the taxpayer may still benefit from the Basic STAR exemption or the Enhanced STAR exemption for senior citizens. The credit will equal seventy percent of the taxes paid over the allowed percentage cap as provided in the bill. Such credit shall not exceed $5,000. Taxpayers will have the option to receive either the Circuit Breaker credit or the Middle Class STAR Rebate check.

Section 3

Contains the effective date.

Justification

With the increased reliance on the real property tax for local government revenue, some homeowners are facing sky-rocking real property tax bills as a result they are often faced with the serious threat of defaulting on their property taxes and/or seriously consider selling their homes. This legislation seeks to establish a cap on the maximum real property tax paid for New Yorkers who have a household adjusted gross income of $250,000 or less. This proposal is a viable alternative response to the serious problem of high real property taxes.

Prior legislative history

2009/10: S.253 Investigations and Government Operations; A.7094 Galef held for consideration in Ways & Means 2007/08 S.1053-C Finance; Similar to A.1575-B, Galef, Ways & Means 2006: S.5982-B Local Government, A.11551, Galef, Local Government

Fiscal implications

To be determined. There are no local fiscal implications.

Effective date

January 1st after which this legislation has been signed into law and shall apply to taxable years commencing on or after such date.