Could California follow New Jersey with their proposed IRS property tax deduction CAP loophole?
In reaction to the recent federal tax reform bill, New Jersey is seeking to address the cap limiting property tax deductions on federal income tax returns.
New Jersey needed to take action to prevent deepened tax burdens in the already higher-taxed states similar to California.
Like California, New Jersey property tax is higher than average due to disproportionate tax assessments (similar to California’s Proposition 13) and this workaround may help taxpayers avoid detrimental tax impacts.
Lawmakers believe that it is unfair that the new tax reform’s elimination of many standard deductions, would actually increase tax expenses.
Under New Jersey’s new rules, property owners can pay property taxes to charitable funds in order to get deductions.
Some lawmakers believe it would mitigate reduced deductions on property taxes, but skeptics think the Internal Revenue Service will deny the changes since it is not comparable to traditional charity.
Another concern is that property taxpayers won’t be able to take advantage of this possible tax saving concept if they pay their taxes through their mortgage company’s impound account.
In California, it is currently Property Tax Payer Best Practice to have your property assessments reviewed annually to ensure the lowest tax possible.
RPC Property Tax Advisors offers an annual “No-Cost Review” of your annual property tax assessments.
