Are You Getting All Your New Jersey Property Tax Breaks?

Receiving a property tax bill for your New Jersey home can be painful. Homeowners in the Garden State face the highest property tax rates in the country. But even with that burden, there might be steps you can take to reduce your annual property tax bill. The two main ways to do so include:

• filing an appeal of your property's assessed value (available to all New Jersey homeowners), and
• checking into whether you qualify for exemptions, rebates, or related tax breaks.

You can seek tax relief using both methods, which we'll discuss below.

Appeal the Taxable Value of Your New Jersey Home

You might know that New Jersey tax authorities compute your property tax by multiplying your home's taxable value by the tax rate. While you cannot directly affect the tax rate (except through local elections!), you might be able to challenge the taxable value of your home.

Consider this example: Alexander and Eliza own a home in New Jersey. The county tax assessor has determined its taxable value to be $300,000. If the tax rate is 1%, Alexander and Eliza will owe $3,000 in property tax. Alexander and Eliza file an appeal, including evidence that a recent natural disaster has lowered their home's value. The appeals board agrees and reduces that value to $250,000. Now Alexander and Eliza owe only $2,500 in property tax on their New Jersey home. (Assuming these values stay constant, they're likely to save many thousands of dollars over the course of their lives from this one minor adjustment.)

New Jersey's Department of the Treasury offers a handy guide to appealing your property tax assessment. Again, the exact process will vary by county, but essentially, you'll need to show why the value of your home is lower than the assessor believed. Perhaps the assessor mistakenly thought your home was larger than it is, or was in better condition. Such issues could be the subject of an appeal.

Obtain All New Jersey Tax Breaks to Which You're Entitled

New Jersey allows for reduced property taxes if you meet certain requirements. Below is a summary of the chief programs in New Jersey.

Basic homestead rebate or credit. Many New Jersey homeowners are entitled to a rebate or credit that's a percentage of the first $10,000 in property tax that they paid last year. The percentage depends on the owner's annual income (the higher your income, the lower the percentage). If your annual income exceeds $250,000, you will not qualify for any rebate or credit. (See N.J.S.A. § 54:4-8.59.)

Veterans. The home of a totally disabled veteran is exempt from property tax, as can the surviving spouse. (See N.J.S.A § 54:4-3.30.) Otherwise, a veteran who actively served in time of war can get a property tax credit of $250, which is also available to the surviving and unmarried spouse of such a veteran. (See N.J.S.A. § 54:4-8.10 et seq.).

Seniors. If 65 years of age or older, you can get an additional $250 homestead rebate. However, your income cannot be over $10,000 per year. (See N.J.S.A. § 54:4-8.41.)

Blind or disabled people. Homeowners who are blind or otherwise disabled within the meaning of New Jersey law, or their surviving and unmarried spouses, may also qualify for a $250 additional rebate, on the same income terms as for seniors. (See N.J.S.A. § 54:4-8.40 et seq.)

Senior tax freeze. Additional tax benefits are available if: (1) you are 65 years old or older, or receiving Social Security disability payments; (2) you have lived in New Jersey continuously for ten or more years; (3) you've lived in your current home for at least the last three years; (4) you've kept current with paying your property taxes; and (5) you meet certain income limitations. If you can jump through all these hoops, you may qualify for reimbursement of some property tax increases. This can become complicated, but is worth exploring. (See N.J.S.A. § 54:4-8.40 et seq.)

For more information on potential property tax exemptions, take a look at New Jersey's online guide to deductions, exemptions, and abatements, compiled by the Department of Taxation.

Although New Jersey laws set statewide property tax rules, your local government handles the administration and levying of the tax. Contact your local tax assessor for complete details on property tax exemptions. Be sure to ask about any forms you need to complete and deadlines for filing them.

In addition to the property tax, which is based on the assessed value of your home, your tax bill might include special assessments. Typically these are made to pay for improvements, such as street paving or repaving, in your neighborhood.

Additional Resources

Depending on the complexity of your situation, you might wish to seek legal, tax, or accounting help to reduce your New Jersey property tax bill.