Big, Money-Saving Property Tax Break In N.J. Could Be Ditched

New Jersey homeowners: That big federal income tax break you get every year could be ditched under a House Republican budget.

Congressional representatives from New Jersey say they are fighting to save the popular property tax deduction that saves Garden State property owners thousands of dollars each year. As part of a plan to simplify the tax code, House Republicans have called for getting rid of the deduction that saves some top-tax-bracket homeowners as much as $4,000 a year.

That's very bad news for New Jersey residents who rely heavily on the tax deduction.

A study from the Tax Policy Center says that ditching the property tax deduction for state and local taxes would cost New Jerseyans who take the exemption an extra $3,522, while Pennsylvania taxpayers would pay $2,182 more.

A new report by RealtyTrac shows the state continues to have the highest average property tax bill in the country. New Jersey homeowners paid the highest tax rate last year, at 2.31 percent, RealtyTrac says.

Kevin Brady, a Texas Republican, said on the House Republicans' website that everyone would pay less in federal income taxes with a simplified tax code.

“Rather than keep Washington taxes high and have just a few get relief from state and local taxes, we’re proposing to lower taxes for everybody at every income level so they can use those dollars for what’s important to them,” said Brady, the Ways and Means Committee chairman.

U.S. Rep. Bill Pascrell Jr., a Democrat from New Jersey, recently advanced a resolution urging that the federal property tax deduction "not be further restricted." He said House Republicans' push for tax reform shouldn't mean "using a sledge hammer to drive federal income tax rates as low as possible."

"While lowering rates is our goal, the reality is that hammer just might whack one of the few areas where many middle class homeowners get a break on their taxes," Pascrell said in a statement.

He said property tax increases have consistently outpaced increases to median home values and incomes, adding that the average New Jersey homeowner has seen their property taxes increase by 66 percent since 2001

"The reality is that the majority of our property taxes fund schools and social services," he said. "With demand for services outpacing local incomes and employment, state and local governments will continue to lean on property taxes to meet expenses."

Patch file photo