Plans are moving forward to offer middle class homeowners in the Garden State some additional tax relief.
State Sen. Troy Singleton, D-Burlington, is sponsoring a measure that would give homeowners a tax credit of up to $1,000 in order to help cover an extra mortgage payment.
The effort comes in response to federal tax-code changes made at the end of last year that cap write-offs for state and local taxes at $10,000.
He said under this plan “you’re able to shorten the length of time on your mortgage and help speed up your access to that capital that becomes equity in your home.”
Singleton stressed this will give many middle class homeowners at least some semblance of financial relief.
“We believe that this will not only help individuals pay down their mortgage faster, but also makes it easier for them to make ends meet on a day to day sort of way.”
He pointed encouraging middle class homeowners to pay down their mortgage quicker makes sense because it gives them “some financial flexibility and stability to spend that money on things that matter most to them, by having that equity in their homes.”
“We think this is a unique way to provide a benefit to New Jersey homeowners and we’re excited about the prospects of it moving forward.”
Rutgers University economist James Hughes said given the fact that New Jersey is one of the states that is really hurt by the new federal tax legislation, it makes sense for our lawmakers to try and compensate for the fiscal pain that’s been placed on New Jerseyans.
“For the middle class, a $1,000 tax credit and the potential of building up more home equity really could be beneficial over a 10 year period.”
He noted New Jersey is one of the most expensive states in the nation and many in the middle class are struggling just to survive.
“It’s not a game changer but I think it’s certainly a benefit in the long term for New Jerseyans," Hughes said.
Singleton said owning a home has always been a big part of the American dream, but in an expensive state like New Jersey it’s even more difficult.
Under his bill, single homeowners earning up to $125,000 a year or married couples earning a maximum of $250,000 would qualify to get a tax credit on their state taxes of up to 50 percent of their mortgage prepayments, which would be capped at $1,000.
He explained the credit would be offered for 10 years to individuals with a 15- or 30-year mortgage on their primary residence, or on another type refinanced mortgage that requires regular payments.
So far there is no estimate on what this program could wind up costing New Jersey, but Singleton believes the economic stimulus the program would provide for the state would more than offset the up-front costs.
The measure has already gotten the green light from the Senate Community and Urban Affairs Committee and is headed to the Budget Committee. Singleton says he’s hopeful the measure can be passed in the fall and be sent to the governor’s desk by early next year.