A tax break for veterans waits for Murphy’s signature

Bill would expand property-tax benefit to disabled vets living in housing cooperatives, giving them the same break others have had for decades
Credit: (NJ Spotlight News)
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A new group of disabled veterans in New Jersey would be eligible to receive a full property-tax exemption if Gov. Phil Murphy signs legislation now sitting on his desk.

The bipartisan bill would allow fully disabled veterans and their surviving spouses who are residents of housing cooperatives to qualify, starting next year, for a property-tax break now provided to fully disabled veterans and surviving spouses who own homes, apartments or condos.

The push to revise who can get the full property-tax exemption comes after New Jersey voters last year approved another rule change for the veterans tax-break program. That revision allowed all fully disabled veteran homeowners to  receive the exemption instead of just those who were disabled during wartime.

Sponsors of the legislation to broaden the tax break to include all fully disabled veterans who live in co-ops say since those veterans and their surviving spouses are effectively co-owners of their buildings, they also deserve to receive a property-tax exemption.

The exemption would be used to offset the property-tax bill attributed to a veterans housing cooperative unit and funded via monthly fees, according to the bill.

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“With many disabled veterans facing significant financial challenges, affordable housing is a critical need that co-ops and mutual housing groups can fill,” said Assemblymen John Armato and Vince Mazzeo, both D-Atlantic.

“It’s only fair disabled veterans in these residences receive the same tax exemption as fellow veterans living in more traditional homes,” the bill sponsors said.

History going back 70-plus years

Property-tax breaks have been offered to New Jersey’s veterans for more than 70 years as a way to recognize their sacrifices, and the veterans tax breaks have been enshrined in the state Constitution.

But in more recent decades, the full property-tax exemption for disabled veterans has taken on new meaning as local property-tax bills in New Jersey have risen to among the highest in the country. Last year, the average property-tax bill in the state rose to a record high of $9,112, according to the state Department of Community Affairs.

Under the current rules for New Jersey’s veterans tax break, those who can qualify for a full property-tax exemption are fully disabled veterans, as well as surviving spouses, who “reside in a single-family home, a portion of a multi-family home, a unit in a condominium or an apartment in a horizontal property regime.”

The legislation seeking to expand eligibility to fully disabled veterans and surviving spouses who are residents of housing cooperatives would apply to a “unit in a cooperative or mutual housing corporation which is the legal residence in this state of a disabled veteran tenant shareholder or the veteran’s surviving spouse,” according to the bill.

If the measure is signed into law by Murphy, new rules for the exemption would be drafted to account for the “amount of real property taxes attributed to the cooperative unit or mutual housing residential unit,” the bill says.

Not funded from state budget

Unlike other property tax-relief programs offered to New Jersey residents, the veterans property-tax exemption is not covered by the state budget, but is instead absorbed by all the other taxpayers living within a municipality where a fully disabled veteran resides.

It’s unclear how much it would cost to expand eligibility for the exemption to the residents of housing cooperatives, according to a fiscal note prepared by the nonpartisan Office of Legislative Services.

A 2015 study by the Department of Community Affairs estimated that approximately 19,000 housing units in New Jersey are classified as cooperative housing units. But it’s not known how many of those units are currently occupied by a fully disabled veteran or their surviving spouse.

“The OLS is unable to quantify the annual revenue loss, given an absence of data from which the OLS could extrapolate the amount of property taxes currently paid by taxpayers who would become newly eligible for a complete property-tax exemption, notably totally and permanently disabled veterans and their surviving spouses living in cooperatives and mutual housing corporations,” according to the fiscal note.

The bill was passed unanimously by the Assembly last month. Since it already received approval from the Senate, the bill is now sitting on Murphy’s desk. If the measure is signed into law by the governor, the proposed policy change would go into effect starting Jan. 1.

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