Bill Text: NJ A2650 | 2018-2019 | Regular Session | Amended
Bill Title: Recognizes residential property tax advance payments for gross income tax homestead property tax deduction.
Spectrum: Moderate Partisan Bill (Democrat 4-1)
Status: (Engrossed - Dead) 2018-04-05 - Received in the Senate, Referred to Senate Budget and Appropriations Committee [A2650 Detail]
Download: New_Jersey-2018-A2650-Amended.html
ASSEMBLY, No. 2650
STATE OF NEW JERSEY
218th LEGISLATURE
INTRODUCED FEBRUARY 1, 2018
Sponsored by:
Assemblyman ROY FREIMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
Assemblywoman JOANN DOWNEY
District 11 (Monmouth)
SYNOPSIS
Recognizes residential property tax advance payments for gross income tax homestead property tax deduction.
CURRENT VERSION OF TEXT
As reported by the Assembly State and Local Government Committee on February 12, 2018, with amendments.
An Act concerning the gross income tax deduction for residential property tax advance payments by homeowners, amending and supplementing P.L.1996, c.60.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.1996, c.60 (C.54A:3A-16) is amended to read as follows:
2. As used in this act:
"Condominium" means the form of real property ownership provided for under the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.).
"Continuing care retirement community" means a residential facility primarily for retired persons where lodging and nursing, medical or other health related services at the same or another location are provided as continuing care to an individual pursuant to an agreement effective for the life of the individual or for a period greater than one year, including mutually terminable contracts, and in consideration of the payment of an entrance fee with or without other periodic charges.
"Cooperative" means a housing corporation or association which entitles the holder of a share or membership interest thereof to possess and occupy for dwelling purposes a house, apartment, manufactured or mobile home or other unit of housing owned or leased by the corporation or association, or to lease or purchase a unit of housing constructed or to be constructed by the corporation or association.
"Dwelling house" means any residential property assessed as real property which consists of not more than four units, of which not more than one may be used for commercial purposes, but shall not include a unit in a condominium, cooperative, horizontal property regime or mutual housing corporation.
"Homestead" means:
a. a dwelling house and the land on which that dwelling house is located which constitutes the place of the taxpayer's domicile and is owned and used by the taxpayer as the taxpayer's principal residence;
b. a dwelling house situated on land owned by a person other than the taxpayer which constitutes the place of the taxpayer's domicile and is owned and used by the taxpayer as the taxpayer's principal residence;
c. a condominium unit or a unit in a horizontal property regime or a continuing care retirement community which constitutes the place of the taxpayer's domicile and is owned and used by the taxpayer as the taxpayer's principal residence.
In addition to the generally accepted meaning of owned or ownership, a homestead shall be deemed to be owned by a person if that person is a tenant for life or a tenant under a lease for 99 years or more, is entitled to and actually takes possession of the homestead under an executory contract for the sale thereof or under an agreement with a lending institution which holds title as security for a loan, or is a resident of a continuing care retirement community pursuant to a contract for continuing care for the life of that person which requires the resident to bear, separately from any other charges, the proportionate share of property taxes attributable to the unit that the resident occupies;
d. a unit in a cooperative or mutual housing corporation which constitutes the place of domicile of a residential shareholder or lessee therein, or of a lessee or shareholder who is not a residential shareholder therein, which is used by the taxpayer as the taxpayer's principal residence; and
e. a unit of residential rental property, which unit constitutes the place of the taxpayer's domicile and is used by the taxpayer as the taxpayer's principal residence.
"Horizontal property regime" means the form of real property ownership provided for under the "Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.).
"Mutual housing corporation" means a corporation not-for-profit, incorporated under the laws of this State on a mutual or cooperative basis within the scope of section 607 of the Lanham Act (National Defense Housing), Pub.L.849, 76th Congress (42 U.S.C.1521 et seq.), as amended, which acquired a National Defense Housing Project pursuant to that act.
"Principal residence" means a homestead actually and continually occupied by a taxpayer as the taxpayer's permanent residence, as distinguished from a vacation home, property owned and rented or offered for rent by the taxpayer, and other secondary real property holdings.
"Property taxes" means payments to municipalities for which an assessment by a municipality is to be prepared or has been made on an ad valorem basis on both land and improvements, and shall not include payments made in lieu of taxes.
"Rent constituting property taxes" means 18% of the rent paid by the taxpayer for occupancy during the taxable year of a unit of residential rental property which the taxpayer occupies as a principal residence; notwithstanding the definition of "property taxes" herein, rent constituting property taxes includes the rent paid for the occupancy of a manufactured home installed in a mobile home park.
"Residential rental property" means:
a. any building or structure or complex of buildings or structures in which dwelling units are rented or leased or offered for rental or lease for residential purposes;
b. a rooming house, hotel or motel, if the rooms constituting the homestead are equipped with kitchen and bathroom facilities; and
c. any building or structure or complex of buildings or structures constructed under the following sections of the National Housing Act (Pub.L.73-479) as amended and supplemented: section 202, Housing Act of 1959 (Pub.L.86-372) and as subsequently amended, section 231, Housing Act of 1959.
"Residential shareholder in a cooperative or mutual housing corporation" means a tenant or holder of a membership interest in that cooperative or corporation, whose residential unit therein constitutes the tenant's or holder's domicile and principal residence, and who may deduct real property taxes for purposes of federal income tax pursuant to section 216 of the federal Internal Revenue Code of 1986, 26 U.S.C.216.
(cf: P.L.1996, c.60, s.2)
2. Section 3 of P.L.1996, c.60 (C.54A:3A-17) is amended to read as follows:
3. a. A resident taxpayer under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be allowed a deduction from gross income for property taxes 1due and paid on the taxpayer's homestead for the calendar year in which the taxes are due and payable1 not in excess of $10,000, 1and a one-time additional deduction, at the election of the taxpayer, in an amount not in excess of $10,000 for property taxes paid in advance in the 2017 calendar year for the calendar year 2018 property taxes that are due and payable during calendar year 2018, which amounts shall be1 subject to the limitations of subsection f. of this section 1[, due and paid for the calendar year in which the taxes are due and payable, and paid in advance in the 2017 calendar year for the 2018 calendar year in which the taxes are due and payable, on the taxpayer's homestead] as may apply1.
b. A deduction for property taxes shall be allowed pursuant to this section in relation to the amount of the property taxes actually paid by or allocable to a resident taxpayer who has more than one homestead, but the aggregate amount of the property taxes claimed shall not exceed the total of the proportionate amounts of property taxes assessed and levied against or allocable to each homestead for the portion of the taxable year for which the taxpayer occupied it as the taxpayer's principal residence.
c. If title to a homestead is held by more than one individual as joint tenants or tenants in common, each individual shall be allowed a deduction pursuant to this section only in relation to the individual's proportionate share of the property taxes assessed and levied against the homestead. The proportionate share shall be equal to that of all other individuals who hold the title, but if the conveyance under which the title is held provides for unequal interests therein, a taxpayer's share of the property taxes shall be in proportion to the taxpayer's interest in the title.
d. If title to a homestead is held by a husband and wife who own the homestead as tenants by the entirety, or if that husband and wife are both residential shareholders of a cooperative or mutual housing corporation and occupy the same homestead therein, and who elect to file separate income tax returns pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., that husband and wife shall each be entitled to one-half of the deduction for property taxes for which they may be jointly eligible pursuant to this section.
e. If the homestead is a dwelling house consisting of more than one unit, that taxpayer shall be allowed a deduction for property taxes only in relation to the proportionate share of the property taxes assessed and levied against the residential unit occupied by the taxpayer, as determined by the local tax assessor.
f. Notwithstanding the provisions of subsection a. of this section to the contrary: (1) a resident taxpayer shall be allowed a deduction for a taxpayer's taxable year beginning during 1996 based on 50% of the property taxes not in excess of $5,000 paid on the taxpayer's homestead; [and] 1and1 (2) a resident taxpayer shall be allowed a deduction for a taxpayer's taxable year beginning during 1997 based on 75% of the property taxes not in excess of $7,500 paid on the taxpayer's homestead 1[; and (3) a resident taxpayer shall be allowed a deduction for a taxpayer's taxable year beginning during 2017 for property taxes not in excess of $20,000 paid on the taxpayer's homestead]1.
g. Notwithstanding any other provision of this section, the deduction allowed under this section to a resident taxpayer eligible to receive a homestead property tax reimbursement pursuant to P.L.1997, c.348 (C.54:4-8.67 et al.) shall not exceed that resident taxpayer's base year property tax liability as determined pursuant to P.L.1997, c.348 (C.54:4-8.67 et al.).
h. Notwithstanding any other provision of this section, for the taxable year beginning January 1, 2009, a taxpayer who has gross income for the taxable year of more than $250,000 and is not:
(1) 65 years of age or older at the close of the taxable year; or
(2) allowed to claim a personal deduction as a blind or disabled taxpayer pursuant to subsection (b) of N.J.S.54A:3-1,
shall not be allowed a deduction pursuant to this section;
provided however, the deduction for a taxpayer who has gross income for the taxable year of more than $150,000 but not exceeding $250,000 and is not:
(1) 65 years of age or older at the close of the taxable year; or
(2) allowed to claim a personal deduction as a blind or disabled taxpayer pursuant to subsection (b) of N.J.S.54A:3-1,
shall not exceed $5,000.
(cf: P.L.2009, c.69, s.2)
3. Section 5 of P.L.1996, c.60 (C.54A:3A-19) is amended to read as follows:
5. a. If a taxpayer who is eligible for a deduction for property taxes under section 3 of this act for a part of the taxable year is also eligible for a deduction for rent constituting property taxes under section 4 of this act for a part of the taxable year, the taxpayer shall be allowed a deduction, 1[not in excess of $10,000,]1 subject to the limitations of subsection b. of this section, the amount of which shall be equal to the sum of 1:
(1)1 the amount of property taxes due and paid for the calendar year in which the property taxes are due and payable , 1not in excess of $10,000, on a homestead that is not a unit of residential rental property;1 and
1(2) a one-time additional deduction, at the election of the taxpayer, in an amount not in excess of $10,000 for property taxes1 paid in advance in the 2017 calendar year for the calendar year 2018 in which the taxes are due and payable, on a homestead that is not a unit of residential rental property 1;1 and
1(3)1 the amount of rent constituting property taxes due and paid for the calendar year in which the rent constituting property taxes is due and payable for the occupancy of a homestead that is a unit of residential rental property,
provided however, that the amount of property taxes 1and the one-time additional deduction for property taxes paid in advance in the 2017 calendar year1 shall be subject to the limitations set forth in subsections b. through [e.] f. of section 3 and the amount of rent constituting property taxes shall be subject to the limitations set forth in subsections b. and c. of section 4 as may be applicable.
b. Notwithstanding the provisions of subsection a. of this section to the contrary: (1) a taxpayer who is eligible for a deduction for property taxes under section 3 of this act for a part of the taxable year and is also eligible for a deduction for rent constituting property taxes under section 4 of this act for a part of the taxable year, shall be allowed a deduction for the taxpayer's taxable year beginning during 1996 based on 50% of an amount not in excess of $5,000, the amount of which shall be equal to the sum of the amount of property taxes paid on a homestead that is not a unit of residential rental property and the amount of rent constituting property taxes paid for the occupancy of a homestead that is a unit of residential rental property; [and] (2) a taxpayer who is eligible for a deduction for property taxes under section 3 of this act for a part of the taxable year and is also eligible for a deduction for rent constituting property taxes under section 4 of this act for a part of the taxable year, shall be allowed a deduction for the taxpayer's taxable year beginning during 1997 based on 75% of an amount not in excess of $7,500, the amount of which shall be equal to the sum of the amount of property taxes paid on a homestead that is not a unit of residential rental property and the amount of rent constituting property taxes paid for the occupancy of a homestead that is a unit of residential rental property; and (3) a taxpayer who is eligible for a deduction 1not in excess of $10,0001 for property taxes under section 3 of this act for a part of the 2017 taxable year 1and for a taxpayer who elects to take a deduction in an amount not in excess of $10,000 for property taxes paid in advance in the 2017 calendar year for the calendar year 2018 property taxes that are due and payable during calendar year 2018,1 and is also eligible for a deduction for rent constituting property taxes under section 4 of this act for a part of the 2017 taxable year, shall be allowed a deduction for the taxpayer's taxable year beginning during 2017 based on the amount equal to the sum of the amount of property taxes 1and the amount of the advance payment of property taxes1 paid on a homestead that is not a unit of residential rental property 1[paid for the calendar year in which the property taxes are due and payable, and paid in advance in the 2017 calendar year for the 2018 calendar year in which the taxes are due and payable,]1 and the amount of rent constituting property taxes paid for the occupancy of a homestead for a part of the taxable year that is a unit of residential rental property.
(cf: P.L.1996, c.60, s.5)
4. (New section) 1a. A taxpayer who paid property taxes in advance in the 2017 calendar year for the 2018 calendar year may elect to claim: (1) an additional deduction for taxable year 2017 as provided in P.L. , c. (C. ) (pending before the Legislature as this bill) that includes the advance payment; or (2) claim a deduction for taxable year 2018 that is the sum of the payment of property taxes made in the 2018 calendar year that are due and payable in the 2018 calendar year, and the amount of the advance payment made in the 2017 calendar year, the sum of which shall be subject to the annual taxable year deduction limit of $10,000. The Director of the Division of Taxation shall promptly provide public notice in an expedited manner of the election afforded to taxpayers pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
b.1 No deduction shall be claimed by a taxpayer pursuant to the "Property Tax Deduction Act," P.L.1996, c.60 (C.54A:3A-15 et seq.) for property taxes paid in advance in the 2017 calendar year for the 2018 calendar year if the taxpayer requests, after that advance payment is made, that the advance payment be refunded to the taxpayer from the municipality to which the advance payment was made.
5. This act shall take effect immediately and be retroactive to December 22, 2017.
