Categories: Legal

Homestead Rebate for New Jersey Residents

According to the Tax Foundation, New Jersey has the highest state and local tax burden in the country, estimated at an average of 11.8% of income compared to a national average of 9.7%. One of the main reasons is the high rate of property taxes in New Jersey. But there is some relief available in the form of a homestead rebate. This rebate is part of a property tax relief program provided by the State of New Jersey.

If your principal residence is in New Jersey, you are either a homeowner or a tenant and your gross income does not exceed certain limits ($100,000 for 2008), you may qualify to claim a homestead rebate. The rebate is not available for a vacation or second home. The homestead rebate depends on the state budget available and is subject to change. There are reports that New Jersey is considering suspending the property tax rebates in 2009 due to a significant state budget deficit. But you should apply nevertheless.

The homestead rebate is based on your status as a homeowner or tenant of your principal residence in New Jersey on October 1st of the previous year. Homeowners qualify for this relief on the property taxes they pay directly, and tenants qualify based on the property taxes they pay indirectly through rent. Part-year residents of New Jersey are eligible for the homestead rebate as long as they occupy their principal residence in New Jersey on October 1st.

The amount of the homestead rebate is based on your income, filing status and whether you are 65 or older or eligible to claim an exemption as blind or disabled. The amount of the rebate also depends on New Jersey budgetary constraints.

How you apply for the homestead rebate depends on whether you are a homeowner or tenant. If you live in a mobile home located in a mobile home park, you are considered a tenant for purposes of applying for the homestead rebate, regardless of whether you own or rent the mobile home. If you rent a condominium or unit in a cooperative housing complex you are considered a tenant, and if you are a resident shareholder or you own a condominium and pay property taxes, you are considered a homeowner. If you are a resident of a continuing care retirement community and you bear your proportionate share of property taxes, you are considered a homeowner.

How to claim the rebate

If you were a tenant in New Jersey, you claim your homestead rebate by filing Form TR-1040 when you file your annual New Jersey state income tax return on Form NJ 1040. If you are not filing a New Jersey income tax return because you are not required to file based on your income level, you can still claim the homestead rebate. You can file Form TR-1040 by itself. In that case you have until November 2nd to file the form.

According to the New Jersey Department of Taxation, applications for the homestead rebate for homeowners are expected to be mailed at the end of April, and homeowners apply either online or by phone.

Property tax reimbursement for seniors

New Jersey residents who are age 65 or older or disabled may be eligible for a property tax reimbursement in addition to the homestead rebate and the property tax deduction or credit they claim on their New Jersey income tax return. Applications for the property tax reimbursement (Form PTR-2) are mailed to homeowners who qualified for the property tax reimbursement the previous year. If this is the first year you qualify, you can file Form PTR-1.

Sources:
Instructions for Form PTR-1 – New Jersey Department of Taxation
Property Tax Relief Programs – New Jersey Department of Taxation
Tenant Homestead Rebate Application Instructions – New Jersey Department of Taxation