New Jersey homeowners are getting some property tax relief
Homeowners in New Jersey are getting a little bit of breathing room on their property taxes.
Gov. Phil Murphy signed an executive order permitting municipalities to shift the property tax payment deadline from May 1 to June 1.
The Garden State is home to the highest levies on property in the nation, with a mean effective property tax rate of 2.21%, according to the Tax Foundation.
In New Jersey, localities can give homeowners up to 10 days past the deadline to make their quarterly payments, which fall on Feb. 1, May 1, Aug. 1 and Nov. 1.
Miss the deadline altogether, and you can be on the hook for penalties of up to 18%.
“We think, given people’s constraints, that giving extra time for the payment of property tax obligations might make sense,” said Andrew Moylan, executive vice president of the National Taxpayers Union Foundation.
Moylan co-authored a recent paper advocating for additional delays on tax payments. For individuals whose hours or pay have been slashed due to coronavirus, these delays act as a short-term loan from the government, he wrote.
Other states are also allowing municipalities to take a more relaxed approach to property taxes, at least temporarily.
For instance, Iowa has suspended interest and penalties for those who are late on property taxes, and Wisconsin is allowing districts to do the same for payments due after April 1 and paid by Oct. 1.
More jurisdictions may follow.
“You’re going to start seeing places push these deadlines back because their residents don’t have the money,” said Richard Auxier, research associate in the Urban-Brookings Tax Policy Center at the Urban Institute.
A difficult choice
As unemployment rates continue to tick up and businesses remain shuttered due to lockdowns, states are finding themselves starved for revenue from income and sales taxes.
States are staring down a $105 billion deficit, in aggregate, for the 2020 fiscal year as Covid-19 saps their finances, according to estimates from the Center on Budget and Policy Priorities.
Those budgetary troubles trickle down to counties, cities and towns, which depend on property tax collections to fund their schools and other necessary services.
“Not only people but also businesses are in the same spot: There’s no money coming in,” said Auxier. “People are telling their districts that they don’t want delays; they want cuts and significant property tax relief.”
“At the same time, localities and states are having demands for services go up,” he said.
Talk to your servicer
Homeowners who pay quarterly property taxes directly to their municipality can easily take advantage of a deadline extension. They can hold on to their check a little longer.
The process isn’t as simple for homeowners who pay their property taxes and homeowner’s insurance coverage through an escrow account.
In this case, a portion of each monthly mortgage payment goes into escrow and your servicer taps the account to make timely payments toward insurance premiums and taxes.
That means it might be too late to ask for relief if you’re using escrow to pay property taxes by May 1.
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“The servicer has already been collecting the money all along,” said Barry Zigas, senior fellow at the Consumer Federation of America.
Nevertheless, it doesn’t hurt to ask your servicer for some help if you need it, especially if your locality pushes the next deadline further out.
“Those who are struggling with their bills ought to ask whether escrowed taxes can be part of that conversation,” said Moylan. “It could provide some additional relief to people if they see some additional extensions in their area.”