Circuit Breaker Tax means Very Little to the average White Plains taxpayer.
How would this effect the typical White Plains homeowner? Since White Plains property taxes are so low proportionately to the rest of the area, not much.
If you own a $700,000 home, (the median house value in White Plains), you pay $12,600 in property taxes. If you earn in adjusted gross income of more than $175,000 but less than $250,000, the amount of property tax you pay before you get Circuit Breaker relief kicks in, according to Assemblyperson Galef’s bill works out thusly:
A median home pays $12,600 in property taxes, the person earning $175,000 to $250,000 gets no relief on the median home because your threshold before the state pays you back anything is $16,000 for you $250,000-earners out there, and $14,000 for you earning $175,001.
If the STAR Rebate is killed and replaced with the Circuit Breaker, and you make a little less than $250,000 you are out $517.88 thanks to Circuit Breaker tax relief.
Million Dollar Home. You get nothing due to WP “low” taxes
If you own a $1 Million home in White Plains, your property tax is give or take, gets you a little back, because you’re paying about $14,000 in city, school and county property taxes; you still do not beat the $14,000 threshold of property tax. Again you lose the $517.88 in the STAR REBATE with this “Circuit Breaker” tax relief. (All assessments of homes are different, it should be kept in mind, and the assessment dollar amounts used here are average property taxes at those home values, given out by the White Plains Assessor.)
$1.5 Million — Relief.
If you own a $1.5 Million home in White Plains — and earn less than $250,000, you get relief, because you’re paying $23,000 a year in city, country, and property taxes. So the person, say living in retirement (where they are not making $250,000 a year) in a White Plains home assessed at the $1.5 Million level would get 70% back from the state on $9,000 of property taxes or $6,300 — but not quite, the Circuit Breaker caps your refund at $5,000 — and you have to deduct the $517.88 in the STAR Exemption — your actual relief is not $5,000, but $4,482. But, in reality, how many persons earn less than $250,000 a year and own $1.5 Million homes?
If by any chance you own a $2 Million home in White Plains and have income below $250,000 you are still capped at $5,000, and lose $517.88.
Lower Taxed Homes= Less Relief
In the lower taxed homes in White Plains there is little relief under Circuit Breaker, unless you‘re on fixed income, but I will get to that in a moment. It, too, works out less than the Middle Class STAR Rebate, let’s see how it works out in White Plains.
A $500,000 home pays about $9,000 in property taxes. If you make $175,999, 7% of that is your maximum property tax, you have to run up $12,250 in property taxes in White Plains before you get relief. So you get nothing under Circuit Breaker.
On the lower run of this tier at $120,000 a year you have to runup $8,500 in property taxes before the state pays you back at the 70% rate, you’d get a $350 refund — less than the typical Middle Class STAR Rebate.
But these are White Plains rates, mind you. For this $350 refund, you lose a $776.82 Middle Class Star Rebate — you lose money under the Circuit Breaker plan as presently constituted if you live in White Plains.
I cannot emphasize enough the need for legislators across the county, (and across the state) to analyze this effect.
Lowest Valued Homes= No Relief Under Certain Conditions
A $400,000 home (about the lowest price you can get a home for in WP), pays about $5,000 in property taxes, so if you’re making $120,000 with a maximum property tax cap of 7% (you have to pay $8,400 in property taxes before you can get Circuit Breaker relief, so you get no relief under the Circuit Breaker plan.
If the Middle Class STAR Rebate is killed, you are getting no relief, if you make $120,000 on the 7% minimum property tax, and you’re losing $776.82. Is that tax relief? Only in very high property tax communities does the mathematics work. Does anyone know where those are?
Low Income Levels Short-changed.
If you are making $119,999 or less the state Circuit Breaker bill as presently constituted grants you a 6% property tax run up before the Circuit Breaker 70% rebate kicks in on the excess over 6% of your income. At this level you get some relief on a $400,000 or $500,000 home, the lower your income is below $119,999 the more the relief you get.
If you make $119,999 and own a $400,000 home there is no relief ($7200 required before property tax relief, and taxes are $5,000).
If you own a $500,000 home you get $1,200 back from the state ( 70% of $1,800 the difference between $7200 and $9000, your White Plains property taxes.
However, this year you will get a $1,035.71 Middle Class STAR Rebate. If Circuit Breaker kicks in next year, your real property tax relief is $165! The state is saving money in White Plains with this Circuit Breaker.
Say you make $100,000, you get less relief, believe it or not. You must pay your first $6,000 in property taxes, so on a $400,000 home ($5,000 in taxes), there is no relief available.
On the $500,000 White Plains home, property taxing at $9,000, you get 70% of $3,000 back or $2,100. If the state takes away the Middle Class STAR Exemption, deduct $1.035.71 from that and your real Circuit Breaker Relief is about $1,064.
Median Income Owner pays more Property Tax.
The kicker is that if you are making a median income of $80,000 you get even less “relief” on the $400,000 home or the $500,000 home under Circuit Breaker.
You have to be paying $4,800 in property taxes to get any relief. The average taxes on the $400,000 home are $5,000, so you get 70% of $200 that works out to $140 of property tax relief, and if the state has its way with this bill and kills the STAR Rebate, you pay $896 more in taxes. ($1,035.71 minus $140).
You lose money if the Middle Class STAR rebate is killed that currently pays you $1,035.71.
On the $5,000 home, $9,000 is the average tax. Here the median income person gets a break.
Deducting the $4,800 deductible, they have $4,200 in tax relief eligible to be multiplied by 70%, resulting in a property tax relief of $2,940. This is nice, but if you take away the Middle Class STAR Rebate of $1,035.71, the real relief is cut to $1,904.
The Retiree Benefits Most.
As you go up the income ladder, the person who is retired living in an older home, does get relief if their income is low.
For example if you’re making say $110,000, you get relief after $7,000 is paid in property taxes. On the median home, you get a nice refund. ($12,600 — the property tax on a $700,000 White Plains home — minus $7,000 gives you $5,600 over your minimum property tax. You get 70% of that back –$3,920 very nice!)
But, if the STAR Rebate goes — this gets cut to $2,884. Still nice — if the school district doesn’t eat that up with a hefty 2009-2010 tax increase!
If you’re making $80,000 a year and living in a median home paid for — you get more of a tax back. Your minimum property tax is 4,800, then the state will give you back 70% of the remaining $7800 in property tax or $5,000. But don’t forget the loss of the STAR Rebate cuts the relief to $3,964.
For the White Plains family earning over $175,000 in homes at the median or above, there appears to be no advantage to the Circuit Breaker. The persons living on retirement incomes in older homes where property taxes have gone up appear to be the chief beneficiaries in White Plains.
The issue of how the rebates are treated if the Circuit Breaker is passed as a part of any Albany Tax Relief means a lot. Because if treated as regular income to be added to your income in 2010, could make a difference on rebates of $5,000.
For White Plains at least, the Circuit Breaker based on rough math do little for the employed White Plains property owner who is paying a mortgage and paying present county , city and school property taxes which are substantially below the rates paid across the state. Our taxes as WPCNR has just shown are below the 6, 7 and 8% minimum property tax cap is Assemblywoman Galef and State Senator Elizabeth Little’s bill.
The main advantage is to the retired person in an older house, as we have shown, who is on a fixed income. They can qualify for the bigger benefits where as the higher paid individuals do not. At best the top relief any White Plains taxpayer will receive is $5,000. (There was a $2,500 property tax increase along across the city, county and schools alone this year in White Plains.)
The relief of the Circuit Breaker is more directed across the state. A 4% property tax cap, the financial model for White Plains of which has not been worked out yet.
When one works out the math, you can see why no “official” grids showing examples of the Circuit Breaker in effect have been issued to the media.
Legislators should do the math for their districts across the state on this one to see how it affects their constiuents.