In New Jersey, a common concern for property owners is the hefty taxes that they pay. The current and ongoing health crisis is making it increasingly difficult for residents, so much so that the state’s congressional delegation is asking for concessions as part of the relief bill that is believed to be on the horizon. The request went across party lines as both sides of the aisle – Republicans and Democrats – want to help state property owners by asking that the cap on the state and local tax (SALT) be repealed. This is just one aspect of tax considerations for residents of the state. For assistance with addressing taxes, having legal advice may be essential.
Understanding the cap on SALT
The cap on deductions under SALT was part of the 2017 tax cut. Many believe it negatively impacts people in so-called “blue” states because they pay higher taxes in general. Although Republicans supported it, there was concern that it could damage residents in states with already high property taxes, New Jersey being one of them. Part of the reason the representatives want the repeal is that the pandemic has negatively impacted employment, especially in education. They say that eliminating SALT would relieve communities with challenges related to the health crisis.
There have been repeated attempts by lawmakers in Washington DC to repeal the deduction. Two passed in the House of Representatives, but the Senate did not address it. The Biden administration did not mention it in its proposed relief package. A rising number of residents are leaving New Jersey. With that, they are taking businesses with them and possibly damaging the economic outlook. Statistically, the state ranked third in departures. Taxes are a primary reason for this. For more than a century, residents could deduct their state taxes prior to paying federal taxes. The new tax law changed that.
Addressing problems and concerns about taxes with legal assistance
This is just one example of problems New Jersey homeowners face as they choose to live in agreeable locations for their personal and professional lives, but are obligated to pay significant sums in taxes to do so. Property taxes are determined by programs and services, public schooling, ancillary revenue, tax exempt properties in the area, how much taxable properties in the area are worth, and the assessment of the property itself. People who disagree with the assessment can appeal it to potentially have it reduced.
To show that there was an excessive assessment, there are factors that should be considered including its true market value and external contributors like inflation and depreciation. When dealing with any real estate concern, it is wise to have legal advice to try and achieve a favorable outcome. Consulting with experienced professionals in all aspects of real estate – including state and federal taxes – can be helpful.