New Jersey Homestead Rebate

State passes 2012 budget

New Jersey dodged a government shutdown Thursday, June 30 when Gov. Chris Christie signed into law the 2012 budget, but only after using his line-item veto power on several spending items.

The legislature’s budget, passed Wednesday, was cut by $900,000 to $29.7 billion.According to the New Jersey League of Municipalities, the budget increases state aid to school districts by $ 850 000 last year, double the discount firm, increases in funding for hospitals in New Jersey by $ 20 million, provides full funding of health care to low-income and insured by the federal qualified health centers, provides $ 180 million in tax cuts and targeted incentives to stimulate the economy and create jobs, answers New Jersey's commitment to make the payment of state pension funds and preserves aid spending on prescription ups and disabled.

Christie’s vetoes include the elimination of the $50 million Municipal Public Safety Aid Program, and reductions to transitional aid from $149 million to $10 million. His cuts also redirected $49 million from sales taxes collected from the state’s Urban Enterprise Zone municipalities to the state’s general fund account, the removal of a provision that would have based Division of Local Government Services “Best Practices” scoring on a municipality’s compliance with standards included on last year’s inventory, and cutting per capita library in half to $3.7 million.

What's new about New Jersey's Homestead Rebate Program ...

Recent changes to the Homestead Rebate Program in New Jersey will have real estate settlement implications this year and for years to come.  Rather than a check or direct deposit of their homestead rebate, recipients will now see a credit on their tax bill for the second quarter of the year following the application.  While the criterion for receiving a Homestead credit is based on income qualifications of the individual owner(s), the rebate will now be distributed to the property; not the owner(s). Make sense? In other words, the credit remains with the property, not the tax payer(s), even though it was the tax payer’s income that determined the eligibility of the credit.    

 This credit will have little effect on closings that occur between April and December of any given year as the credit will have been applied and therefore can be adjusted at closing.  The real danger in what I call the h omestead blind spot are those closings occurring between November and April of the following year where credits are pending for the subject property but not yet addressed.  Those Homestead applicants who receive a credit based on their income may lose out because those same credits will now go to the new owners of the properties unless the settlement agent escrows in anticipation of this unknown credit.   If not addressed then applicants wanting to be reimbursed will either have to contact the purchaser of the property directly or have their settlement agent to do the same.  Certainly a hassle at the very least.