New Jersey residents may not like paying the nation’s highest property-tax bills, but an online brochure being distributed by the state’s accountants, realtors, and municipal-tax assessors is meant to impart a good understanding of exactly how property taxes work.
The 16-page “Homeowner’s Guide To Property Taxes” is being billed as the first of its kind. It relies on user-friendly diagrams and other graphics to walk residents through topics like the property-tax billing cycle and the annual divvying up of the revenue raised by property taxes.
The guidebook, written by Marc Pfeiffer, assistant director of Rutgers University’s Bloustein Local Government Research Center, also features a list of frequently asked questions. Publicized by the New Jersey Society of Certified Public Accountants, New Jersey realtors, and the Association of Municipal Assessors of New Jersey, the online resource suggests that while the state has long had high property levies, there may be more interest in the issue this year due to a new federal tax law that caps a longstanding write-off for state and local taxes.
“The guide is needed for many reasons, but particularly as New Jersey has the highest property-tax rates in the nation,” said Ralph Albert Thomas, the executive director and chief executive of the CPA organization.
NJ’s ‘over-the-moon’ taxes
In all, $28.3 billion was collected by local governments through property taxes in New Jersey in 2017, and the average property tax bill totaled nearly $8,700, according to data collected by the state Department of Community Affairs. The state’s average property-tax bills have gone up by more than $1,600 over the past decade, despite efforts by policymakers in Trenton to restrain growth. New Jersey’s property taxes are the highest in the country, according to the Washington, D.C.-based Tax Foundation.
Making matters worse for many New Jersey residents is the new cap on the federal deduction for state and local taxes that’s known as SALT. Included in a broader overhaul of the federal tax code that was enacted by President Donald Trump and the Republican Congress late last year, the SALT cap now prevents homeowners from deducting more than $10,000 in property taxes and state income taxes from their federal taxable income. The state’s own deduction limit for property taxes was recently lifted by Gov. Phil Murphy and lawmakers to $15,000. New Jersey has also joined with other high-tax, majority Democratic states in a federal lawsuit that is seeking to have the new federal SALT cap declared unconstitutional.
While the homeowner’s guidebook released earlier this month won’t ease any of the pain for New Jersey residents, it does fully flesh out issues like how individual property-tax bills are calculated and how they relate to the budgets and tax rates set by local governments, including school boards, town councils, and county freeholder boards.
Anatomy of a property-tax bill
There are individual sections that detail the assessment process and the quarterly billing cycle, which is often unknown to homeowners because many pay their bills indirectly through a mortgage company. The guidebook also goes over the anatomy of a typical property-tax bill, which can be very confusing for many homeowners. It also includes a calendar of key dates for homeowners to keep track of, including the April 1 deadline for filing an appeal of an individual property-tax assessment. Successful appeals can lead to lower property-tax bills.
Another key issue explained in the guidebook is what can happen if a lien is placed on a property when a homeowner decides to simply ignore their property-tax bills.
“A lien is a legal action that means the property cannot be sold until the lien is redeemed by paying the amount due to the town. Interest on the principal continues to accumulate until the lien is redeemed,” the guide says.
“If the owner does not redeem the lien by paying the principal and accruing interest to the municipal tax collector (who then pays the lien holder) within two years, the lien holder can commence foreclosure proceedings in state court,” it goes on to say.
The guidebook also provides information about the most popular state-funded property-tax relief program, the Homestead benefit, and it suggests the property-tax information is also relevant for those who rent a home or apartment.
“You indirectly pay property taxes through your rent,” the guidebook says. “When calculating rents, landlords will normally factor in the taxes on the property as one of the costs they recover from their tenants.”