Bill Text: NJ A4068 | 2020-2021 | Regular Session | Introduced
Bill Title: Maintains eligibility for veteran's property tax deduction when property is transferred to trust.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2020-05-07 - Introduced, Referred to Assembly Military and Veterans' Affairs Committee [A4068 Detail]
Download: New_Jersey-2020-A4068-Introduced.html
Sponsored by:
Assemblyman RONALD S. DANCER
District 12 (Burlington, Middlesex, Monmouth and Ocean)
SYNOPSIS
Maintains eligibility for veteran's property tax deduction when property is transferred to trust.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the veteran's property tax deduction and amending P.L.1963, c.171.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 9 of P.L.1963, c.171 (C.54:4-8.18) is amended to read as follows:
9. Where title to property as to which a veteran's deduction is claimed is held by claimant and another or others, either as tenants in common or as joint tenants, a claimant shall not be allowed a veteran's deduction in an amount in excess of his or her proportionate share of the taxes assessed against said property, which proportionate share, for the purposes of this act, shall be deemed to be equal to that of each of the other tenants, unless the conveyance under which title is held specifically provides unequal interests, in which event claimant's interest shall be as specifically established in said conveyance. Property held by husband and wife, as tenants by the entirety, shall be deemed to be wholly owned by each tenant. Nothing herein shall preclude more than one tenant, whether title be held in common, joint tenancy or by the entirety, from claiming a veteran's deduction from the tax assessed against the property so held. Right to claim a veteran's deduction hereunder shall extend to property title to which is held by a partnership, to the extent of the claimant's interest as a partner therein, and by a guardian, trustee, committee, conservator or other fiduciary for any person who would otherwise be entitled to claim a veteran's deduction hereunder, but not to property the title to which is held by a corporation, except that a tenant shareholder in a cooperative or mutual housing corporation shall be entitled to claim a veteran's deduction to the extent of his proportionate share of the taxes assessed against the real property of the corporation or any other entity holding title, and except that a resident of a continuing care retirement community shall be entitled to receive the veterans' deduction to the extent of the share of the taxes assessed against the real property of the continuing care retirement community that is attributable to the unit that the resident occupies. The continuing care retirement community shall provide that amount as a payment or credit to the resident for the amount of the property tax credit received by the continuing care retirement community. That payment or credit shall be made to the resident no later than 30 days after the continuing care retirement community receives the property tax bill on which the credit appears.
The right to claim a veteran's deduction hereunder shall also extend to property title which is held by a trust following an outright transfer of title to the trust by a person who would otherwise be qualified to claim a veteran's deduction hereunder, without regard to the reservation of a life estate interest in the property; provided, however, that the claimant shall continue to occupy the property as their primary residence and shall annually certify their continued occupancy of the property to the assessor on a form prescribed by the Director of the Division of Taxation.
(cf: P.L.2019, c.203, s.4)
2. This act shall take effect immediately.
STATEMENT
Current law requires a veteran who has filed a claim for a veteran's property tax deduction to have legal title (i.e., full or partial ownership interest) to the property for which the deduction is claimed. The statute governing the veteran's property tax deduction also extends eligibility for the deduction to properties held in trust for qualified claimants. Section 9 of P.L.1963, c.171 (C.54:4-8.15) provides that the right to claim a veteran's deduction extends to property title which is held by a guardian, trustee, committee, conservator, or other fiduciary for any person for who would otherwise be entitled to claim such benefit.
When a trust is established, the trust creator, or trustor, gives property to another party, the trustee, who has an fiduciary duty to keep or use the property for the benefit of a third party, the beneficiary. The ownership rights to the property transfer from the trustor to the trustees. Because a veteran who places their property in trust is no longer the property owner, they would lose the right to the property tax deduction. In order to maintain eligibility for the veteran's property tax deduction when a property is placed in trust, the trust is required to provide the veteran with a life tenancy or life estate to the property. A life estate entitles the occupant (the veteran claimant) to all the rights of ownership during the term of the life tenancy, but subjects the property to the trustor's estate tax.
This bill extends eligibility for the veteran's property tax deduction to veterans who do not qualify for the deduction, or who lose eligibility for the deduction, if they are not provided with a life tenancy or life estate when their property is placed in a trust. The bill requires a veteran to continue to occupy the property as their primary residence. The bill also requires the veteran to annually certify their continued occupancy of the property to the municipal assessor on a form promulgated by the Director of the Division of Taxation. It is the sponsor's belief that a veteran should not have their property tax benefits taken away if they decide to place their property in a trust in order to protect their family while continuing to occupy the property.
