Homeowners and tenants who pay property taxes, either directly or through rent, on their principal residence in New Jersey may qualify for either a deduction or a refundable credit on their New Jersey resident income tax return. Homeowners and tenants may be eligible for a deduction or credit even if they are not eligible for a homestead rebate. Qualified residents may be able to deduct up to 100% of their property taxes due and paid or up to $10,000, whichever is less. The tax benefit varies depending on the amount of the taxpayer’s taxable income, the amount of property taxes or rent paid, and filing status. For tenants, 18% of rent paid during the year is considered property taxes paid. The minimum benefit is a refundable credit of $50.

For tax year 2009 homeowners under 65 years of age and not blind or disabled whose New Jersey gross income is more than $250,000 are not eligible for the property tax deduction. In addition, for homeowners under 65 years of age and not blind or disabled whose New Jersey gross income is over $150,000 but not over $250,000, the maximum deduction is limited to $5,000. When determining eligibility for the property tax deduction, and calculating the amount of the deduction, homeowners who file separate returns but occupy the same principal residence as their spouse/civil union partner must use their combined income. Part-year residents must use income from all sources for the entire year. Homeowners who are not eligible for a deduction because their income is over $250,000 can receive a property tax credit if they satisfy the other eligibility requirements.

To determine the actual tax benefit you are eligible to receive, complete Schedule 1 contained in the New Jersey Resident Income Tax Return instruction booklet (Form NJ-1040). If you are claiming a credit for taxes paid to other jurisdictions, first complete Lines 1 and 2 of Schedule 1, then complete Schedule A and Worksheet F to calculate your benefit. If you are using NJ WebFile, the program will determine the greater benefit for you.

Eligible residents who are 65 years of age or older or blind or disabled and who are not required to file a return because their income is below the minimum filing threshold apply for the credit as follows:

• Residents who file only the homestead rebate application will automatically receive their property tax credit with their homestead rebate. These residents should not complete Line 36c, Form NJ-1040 to claim a property tax deduction or Line 48, Form NJ-1040 to claim a property tax credit even if they file an income tax return.


• Residents who are not eligible for the homestead rebate because on October 1, 2009, they were neither homeowners nor tenants may complete the New Jersey income tax return to claim their property tax credit. Such taxpayers must complete Line 48, Form NJ-1040 to claim their property tax credit.

Residents who are not 65 years of age or older or blind or disabled and who are not required to file a return because their income is below the minimum filing threshold are not eligible for a property tax credit.

Additional information on the property tax deduction or credit is contained in the resident income tax instruction booklet.