Do I need to report my New York *City* property tax rebate on my federal tax return?

[tjpeluso1]

As a New York City apartment owner, I received three rebates this year:

1. State STAR Program credit
2. State Homeowner tax rebate
3. City Property tax rebate

I know I need to report both the STAR Program credit and the Homeowner tax rebate from the state on my federal taxes by deducting the rebate amounts from the property tax deduction in TurboTax. Both prior experience and information on the NYS tax website explicitly dictate as such. I do not know, however, whether I need to do the same for the rebate from New York City. This is the first time I am receiving a rebate like this from the city, and I don't know if there's a difference in reporting requirements between the state and local municipality level.

The NYC tax website is unfortunately silent on this subject. [Link 1] [Link 2] I tried opening a case with the city's finance office to get an answer, but after two weeks I've received no reply. This is the last thing I need to figure out before I can file my returns, and I want to obtain both my federal and state tax refunds as soon as possible. Any guidance that anyone can provide here would be greatly appreciated.

[JosephS1]

I cannot find any specific guidance on this from New York City but normally a rebate such as this would have you reduce the applicable tax that you would deduct as an itemized deduction; in this case property taxes.  It is not necessary to report the rebate as an income item unless this is a reimbursement for a prior year that you have previously deducted on your return.

As New York and New York City are known as high tax jurisdictions, the property taxes paid in the past may not have had a beneficial effect on your personal returns if all your other state and local taxes exceeded $10,000, the limit for state and local taxes.

@tjpeluso1 

[tjpeluso1]

My presumption has been precisely what you said is normally the case - that I would need to report the rebate by reducing the amount of my federal property tax deduction. It's just super frustrating that no one seems to definitively know through sourced info whether that's actually the case and that the city doesn't seem interested in clarifying this. TurboTax says my refund would increase by about $30-35 if I don't have to report the rebate, so it's not a trivial difference.

(To clarify, this is not a reimbursement for a prior year. The rebate check came just a few days after the mayor signed the bill for the program in August.)

[JosephS1]

I agree that NYC is less than cooperative in defining the treatment of the rebate but New York State is defining on their Homeowner Rebate.  The link below is directly from the NYS Department of Taxation and Finance and if you scroll down there is a specific question answered about the Homeowner Rebate.

Without specific guidance that can be found on the NYC rebate, reasonableness and conservatism on the treatment of the rebate would suggest a reduction in NYC property taxes paid by the amount of the rebate.

I realize my next statement may be a bit cynical, but I have enclosed a link to the contact page for the NYC Department of Finance.  Perhaps calling may get you directed to a Finance agent that can give you a definitive answer but I would not bet the house on it.

Homeowner Tax Rebate

NYC Department of Finance

@tjpeluso1 

[J9999]

I have the same situation, and I've concluded that we do indeed need to reduce our RET deduction by the amount of the state ("Homeowner Tax Rebate") and city ("Property Tax Rebate") rebates. These are both explicitly defined as rebates of property tax, so it stands to reason that the deductible tax must be net of these rebates. (Because of the $10,000 local tax limit on Schedule A, none of this has any impact on my Federal itemized deduction, but it does have an impact on my New York itemized deduction.)

What I still don't know is where, exactly, to enter this information in the software. I normally enter RET when I enter Form 1098, because as a co-op owner, my RET is reported on Form 1098 along with the interest for the co-op's underlying mortgage. That form itemizes the gross RET along with both the STAR credit and the co-op tax abatement, and I typically enter the net amount (RET - STAR - abatement) in the real-estate taxes paid box when I enter my Form 1098.

Since this year's special state and city rebates checks were sent separately and were not paid through the co-op, and since they do not appear on Form 1098, I'm not sure whether I should adjust the Form 1098 amount (RET - STAR - abatement - state rebate - city rebate), or whether I should report only what's actually shown on the Form 1098 when I enter that form, and then enter the rebates elsewhere in the software.

Any advice?

[JosephS1]

My advice would be to do 1 of 2 things.  First, and what I would consider the easiest would be to deduct the rebates from what is shown on the 1098 and enter the net manually.  The second possibility is to enter the amounts shown on the 1098 and then add an additional entry for the rebates as a negative property tax entry and label such negative as "Rebate Received"

@J9999 

[stife94]

Saw your post and it got me wondering about multiple things. Do you get the STAR credit via check? I get mine via check but I know some people get it as a credit on their tax bill. Wondering now if our co-op's accountant is reporting our gross property tax amount or taking STAR into account. Probably the former. I'd ask but both the accountant and property manager are difficult to deal with. Also wondering about the city's co-op tax abatement. Our co-op times an annual assessment with when they receive the abatement so we don't actually get the abatement. Two lines are added to our monthly maintenance statement in December (Abatement and Assessment) and they zero out. Now I'm wondering if there are any tax implications or again, if the building accountant factors it into the 1098.

[RobertB4444]

Most people receive the STAR credit via check or direct deposit.  It is not taxable in New York.

Whatever tax implications there are for your building's accounting are factored into the 1098 you receive.  

Whether your assessment and the abatement are correctly accounted for is a question for an auditor, unfortunately.

@stife94 

[stife94]

I'm curious about the 1098. One of the replies above said that their 1098 actually had the gross amount of real estate tax paid as well as line items for STAR and the Abatement. I'm curious how common this is as my has 1098 one number.

"Whatever tax implications there are for your building's accounting are factored into the 1098 you receive."

If it were that simple, the state wouldn't need to tell us to reduce our real estate tax deduction by the amount of the STAR credit. 

[AbrahamT]

It is what it  is. If this is the information that appears on your 1098 that all the information is inclusive in that one figure, then go with that number. I wouldn't delve into it any further.

[stife94]

You wouldn't happen to be knowledgeable about form IT-2105.9 Underpayment of Estimated Income Tax? Specifically, Annualized Income Installment Worksheet for New York State, Line 16, Refundable Credits. Is this the sum of the City of New York School Tax credit (fixed amount IT-201 line 69 and rate reduction amount line 69A), STAR credit, and the state and city rebates in 2022? How does one allocate across four periods?

[Cynthiad66]

The process for this computation requires several steps.  You will need information from your NY tax returns to compute amounts for line 10 of the form which is integral in the computation.  I am not an expert in this area but the information below provides guidance for the computation.

Instructions for IT-2105.9

Visual Guidance.

I hope this helps.

[stife94]

Hi, that's not the line I am asking about. I'm asking about Line 16 on Annualized Income Installment Worksheet for New York State. It's a companion form to 2105.9

The instructions I found say: 

Line 16 – Enter the applicable portion of any credits claimed on Form IT-216, line 14; Form IT-201, lines 63 and 65 through 69a; Form IT-201-ATT, lines 14 and 15; Form IT-203, lines 60 and 60a; Form IT-203-ATT, lines 9, 10, 12, and 14; or Form IT-205, line 33. Also include the total amount of any STAR and homeowner tax rebate credits from line 7a of this form.

I can find the amounts of the credits but the instructions are vague on "applicable portion". Credits on Form IT-201, lines 63 and 65 through 69a just sort of "show up" when you fill out your return. They aren't a rebate check.

[Littan-taxes]

I have the exact same question about the co-op 1098 and the star credit amount.  I don't know how to enter this into the software.  I am also uncertain whether this will carry properly to the NYS return.

Also - the software Q page for IT-299 seems incorrect.  I think that I'm entitled to this credit, but the software is saying that I'm not eligible.

[AmyC]

Enter the coop 1098 as-is. For the STAR credit: if you are a homeowner and claim property taxes as an itemized deduction, you will reduce your deduction by the amount of the check.  If you claim the Standard deduction on your tax return you will not need to do this. 

If you want to verify your situation, see Instructions for Form IT-229 Real Property Tax Relief Credit

@Littan-taxes