SOUTHERN OCEAN COUNTY, NJ – Like it or not, New Jersey ranks high when it comes to property taxes. Understandably, the SALT deduction remains a sore spot for many New Jersey residents. A move by the federal legislature could lessen the mass exodus of those who simply can’t afford to live within the Garden State.
What does SALT mean in the first place? Quite simply, the acronym stands for “state and local taxes” deductions allowable on federal tax returns. Under existing law, the cap stands at $10K.
Some Southern Ocean County residents remain unaffected by the limits in deductions. However, a look at some area homes for sales suggests high taxes may have some impact on closing deals.
For example, there’s a listing for a Barnegat house with an excess of $21K in annual property taxes. A Waretown residence on the market for nearly a year has property taxes of nearly $16K. And, the homeowner has reduced the selling price by $255K.
Meanwhile, these numbers may seem minuscule when compared to some of the houses for sale on Long Beach Island. Case in point, the property taxes for one residence are just over $45K.
No doubt New Jersey’s congressional representatives recognize the problem and the need to come up with a solution. Most recently, Representative Andy Kim who represents New Jersey’s third congressional district co-sponsored H.R. 5377, the Restoring Tax Fairness for States and Localities Act.
“New Jersey taxpayers already give more than they get when it comes to our federal taxes, and the 2017 tax bill only made matters worse by capping our SALT deductions,” said Congressman Kim.
“My neighbors in Burlington and Ocean Counties are rightfully upset by this broken tax system, and they deserve relief now from this unfair process,” Congressman Kim continued. “I’m standing up with my colleagues from New Jersey and across the country to support this bill to undo the damage and help middle class families who often had to pay thousands more in taxes.”
The proposed bill provides tax relief by eliminating the marriage penalty and doubling the cap to $20,000 for joint filers for 2019. The bill would also fully restore the SALT deduction for 2020 and 2021.
Notably, a survey conducted by the New Jersey Society of Certified Public Accountants’ (NJCPA) among more than 500 CPAs showed significant differences when federal law tax laws changed. According to the report, an average of 36% percent of those polled said their clients paid more in federal taxes in 2018.
The vast majority of those claiming the deduction in New Jersey and across the nation are middle-class households. In 2016, 40% of New Jersey taxpayers deducted their local property and state income taxes. Those households averaged $18,000 per deduction and over 80% of those who filed, earned less than $200,000.
Congress needs to move fast to get this new plan in place. Earlier this year, Kim helped introduce the SALT Act, along with Congressman Christopher Smith, who represents parts of Ocean County. Congressman Jeff Van Drew was not involved in the introduction of this bill, which would restore the full deduction taxpayers previously had prior to the tax bill passed during the last Congress
Stephanie A. Faughnan is a local journalist and Director of Writefully Inspired, a professional writing and resume service. Feel free to contact her at email@example.com.