Legislative Update

NJ Realtors® Supports SALT Deduction Restoration

BY BRUCE SHAPIRO

The National Association of Realtors® and New Jersey Realtors® have long stressed the importance of tax deductions that benefit homeownership, especially given the high cost of living in states such as New Jersey. Two of these deductions, the Mortgage Interest Deduction and the State and Local Tax (SALT) Deduction, have assisted homeowners to afford to stay in their Garden State homes. However, at the end of 2017, the Tax Cut and Jobs Act was signed into law, which capped the SALT deduction at $10,000. In 2019, six New Jersey counties had property taxes that alone exceeded $10,000, according to the New Jersey Department of Community Affairs. This cap has had a detrimental impact on the affordability of owning a home.

Since the SALT deduction was capped, NJ Realtors® has argued it be restored. While Congress has debated the restoration, the New Jersey State Legislature increased the New Jersey property tax deduction from $10,000 to $15,000 as part of the Fiscal Year 2019 state budget as a way to partially offset the SALT deduction cap.

In 2020, as part of COVID-19 relief packages approved in the U.S. House of Representatives, a two-year suspension of the SALT deduction cap was passed. The U.S. Senate, however, never passed them and the SALT deduction remained capped at $10,000 per year.

Following the 2020 election, a new push to repeal the SALT deduction began. Bipartisan legislation has been introduced, the SALT Deductibility Act, which would restore the pre-2017 deduction—NAR and NJ Realtors® support the legislation.

In January, NJ Realtors® 2021 President Jeff Jones expressed his support for restoring the SALT deduction at a press conference with Rep. Gottheimer. On the same day, all 12 members of New Jersey’s house delegation signed a letter to Speaker of the House Nancy Pelosi and Senate Majority Leader Chuck Schumer in support of restoring the SALT deduction. In the U.S. Senate, Majority Leader Chuck Schumer introduced the Senate version of the SALT tax deduction restoration bill needed and President Biden has also expressed support in the past for restoring this deduction.

While there are many issues facing the new Congress and administration, there have been encouraging signs of a possible restoration of the SALT deduction. NJ Realtors® will continue to support restoration of the SALT deduction to encourage homeownership in New Jersey given the high cost of living while also supporting measures in the State Legislature to address the highest-in-the-nation property taxes.

NEW JERSEY LEGISLATIVE BILLS

A159 – Wirths (R24)

Repeals “Statewide Non-Residential Development Fee Act.”

New Jersey Realtors® Position: SUPPORT

We support this bill which repeals the “Statewide Non-Residential Development Fee Act” as a way to strengthen the commercial real estate market in New Jersey by doing away with the 2.5 percent fee enacted in 2008.

Bill History: 1/14/2020 – Introduced in Assembly and referred to Assembly State and Local Government Committee

A596 – DeMaio (R23), Caputo (D28)

Excludes gains on sales of certain real estate purchases from taxation under corporation business tax and gross income tax.

New Jersey Realtors® Position: STRONG SUPPORT

We strongly support this bill excluding gains from investment properties for three years under the corporate business and tax and income tax in New Jersey to encourage new investment.

Bill History: 1/14/2020 – Introduced in Assembly and referred to Assembly Commerce and Economic Development Committee

A3119 – DeAngelo (D14), Verrelli (D15)/S1509 – Cruz-Perez (D5)

Allows corporation business tax credits for redevelopment of distressed shopping center.

New Jersey Realtors® Position: SUPPORT WITH AMENDMENT

We support this bill with an amendment clarifying that the New Jersey Economic Development Authority would certify that improvements to distressed shopping centers are made within 90 days so that these tax credits can be made available as quickly as possible.

Bill History: 2/13/2020 – Introduced in Senate and referred to Senate Economic Growth Committee 2/24/2020 – Introduced in Assembly and referred to Assembly Commerce and Economic Development Committee