Bill Text: NJ S3456 | 2016-2017 | Regular Session | Introduced
Bill Title: Increases from $10,000 to $17,500 maximum allowable property tax deduction under gross income tax over three years.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-11-09 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S3456 Detail]
Download: New_Jersey-2016-S3456-Introduced.html
Sponsored by:
Senator JENNIFER BECK
District 11 (Monmouth)
SYNOPSIS
Increases from $10,000 to $17,500 maximum allowable property tax deduction under gross income tax over three years.
CURRENT VERSION OF TEXT
As introduced.
An Act increasing the maximum property tax deduction allowed under the gross income tax and amending P.L.1996, c.60.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. 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 [not in excess of $10,000], subject to the limitations of subsection f. of this section, due and paid for the calendar year in which the taxes are due and payable on the taxpayer's homestead , pursuant to the following schedule:
for taxable years beginning before January 1, 2018, the deduction shall not exceed $10,000;
for taxable years beginning on or after January 1, 2018, but before January 1, 2019, the deduction shall not exceed $12,500;
for taxable years beginning on or after January 1, 2019, but before January 1, 2020, the deduction shall not exceed $15,000;
for taxable years beginning on or after January 1, 2020, the deduction shall not exceed $17,500.
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 (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.
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)
2. Section 4 of P.L.1996, c.60 (C.54A:3A-18) is amended to read as follows:
4. a. A resident taxpayer whose homestead is a unit of residential rental property shall be allowed a deduction from gross income for that portion of the rent constituting property taxes [not in excess of $10,000], subject to the limitations of subsection d. of this section, due and paid for the calendar year in which the rent constituting taxes is due and payable, for occupancy of that homestead , pursuant to the following schedule:
for taxable years beginning before January 1, 2018, the deduction shall not exceed $10,000;
for taxable years beginning on or after January 1, 2018, but before January 1, 2019, the deduction shall not exceed $12,500;
for taxable years beginning on or after January 1, 2019, but before January 1, 2020, the deduction shall not exceed $15,000;
for taxable years beginning on or after January 1, 2020, the deduction shall not exceed $17,500.
b. A husband and wife 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., shall each be entitled to one-half of the property tax deduction allowed pursuant to this section.
c. If more than one taxpayer, other than husband and wife, qualify to deduct rent constituting property taxes by reason of their having occupied the same rented homestead, it shall be presumed that the deduction shall be equally divided. A taxpayer may, however, deduct an amount for rent constituting property taxes in the same proportion that the rent paid by that taxpayer bears to the total rent paid by all tenants of the same unit.
d. Notwithstanding the provisions of subsection a. of this section to the contrary: (1) a resident taxpayer whose homestead is a unit of residential rental property shall be allowed a deduction for the taxpayer's taxable year beginning during 1996 based on 50% of the rent constituting property taxes not in excess of $5,000 paid for the occupancy of that homestead; and (2) a resident taxpayer whose homestead is a unit of residential rental property shall be allowed a deduction for the taxpayer's taxable year beginning during 1997 based on 75% of the rent constituting property taxes not in excess of $7,500 paid for the occupancy of that homestead.
(cf: P.L.1996, c.60, s.4)
3. Section 5 of P.L.1996, c.60 (C.54A:3A-19) is amended to read 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, [not in excess of $10,000,] subject to the limitations of subsection b. and subsection c. of this section, the amount of which shall be equal to the sum of the amount of property taxes due and paid for the calendar year in which the property taxes are due and payable on a homestead that is not a unit of residential rental property and 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 shall be subject to the limitations set forth in subsections b. through e. 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.
c. The deduction permitted under subsection a. of this section shall be subject to the following schedule:
for taxable years beginning before January 1, 2018, the deduction shall not exceed $10,000;
for taxable years beginning on or after January 1, 2018, but before January 1, 2019, the deduction shall not exceed $12,500;
for taxable years beginning on or after January 1, 2019, but before January 1, 2020, the deduction shall not exceed $15,000;
for taxable years beginning on or after January 1, 2020, the deduction shall not exceed $17,500.
(cf: P.L.1996, c.60, s.5)
4. This act shall take effect immediately.
STATEMENT
This bill authorizes a three-year incremental increase in the maximum amount of property taxes, paid by a qualifying taxpayer in a taxable year, that may be claimed as a deduction under the State's gross income tax. Ultimately, this cap is raised from $10,000 to $17,500 by taxable year 2020.
Currently, homeowners and tenants may deduct up to $10,000 of property taxes owed and paid during a taxable year on a primary residence. This bill makes the following changes: for taxable years beginning on or after January 1, 2018, but before January 1, 2019, the property tax deduction cap is raised to $12,500; for taxable years beginning on or after January 1, 2019, but before January 1, 2020, the property tax deduction cap is raised to $15,000; and for taxable years beginning on or after January 1, 2020, the cap is raised to $17,500.
New Jersey taxpayers face the highest property taxes in the nation. This bill affords much-needed relief to taxpayers by increasing the amount of property taxes paid that can be deducted from the homeowner's or tenant's annual State gross income tax obligation. Moreover, by phasing this tax relief over a three year period, this bill also avoids the harmful effects of a precipitous reduction in State revenues.
