New Jersey Property Tax Relief
According to the website TaxFoundation, New Jersey was ranked No. 1 nationally for highest paid property taxes per capita in fiscal year 2007, with the average owner paying $2,485 annually, nearly double the average of $1,278. The city of Newark was hit particularly hard, with the city ranked second in the nation for its $8,581 per property tax in 2003. To aid taxpayers, the state has various deduction and credit programs to lower the annual property tax burden.
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How Property is Taxed in New Jersey
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In New Jersey, property taxes are collected in four installments due on the first of February, May, August and November, with real estate assessed by the local government at 100 percent of the fair market value, or the worth of the property if sold in the current real estate market. The value of the home, minus any deductions, is multiplied by the local government's tax rate, which varies from year to year and is dependent on the issuing municipality's annual budget.
Homestead Rebate Program
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New Jersey resident property owners can qualify for the state's Homestead Rebate Program if they have legal residence in the home as of October 1 of the qualifying year and all property taxes from the qualifying year have been paid. Qualifying property owners over 65 or disabled must earn no more than $150,000 per year, and all other owners must earn an annual income of $75,000 or less as of fiscal year 2011.
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Property Tax Reimbursement Program
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Also known as "Senior Freeze," New Jersey's Property Tax Reimbursement Program is offered to homeowners who are 65 years or older or receive federal Social Security disability benefits. As of fiscal year 2011, the applicant must be a New Jersey resident for a minimum of 10 years, and the owner must have lived on the property for at least three years. All previous property taxes must be paid in full at the time of application, and the owner must be below certain total household income levels regardless of marital or civil union status.
Income Tax Deduction
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New Jersey property owners are eligible for an income tax deduction even if the owner did not qualify for a homestead or tax reimbursement. As of fiscal year 2011, residents who qualify can deduct 100 percent of their property taxes, or up to $10,000, if the taxpayer's household does not earn more than a total of $250,000 gross income annually. For tax payers with a gross income between $150,000 and $250,000, a minimum of $5,000 can be deducted. Tenants are also eligible for income tax deductions; a minimum of $50 is refundable for property taxes paid, which is equal to 18 percent of rent paid during the year.
Income Tax Credit
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For New Jersey resident property taxpayers who make an annual gross income of more than $250,000, a property tax credit can be issued, which can help lower the resident's income taxes for the qualifying year.
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