Sponsored by:
Assemblywoman YVONNE LOPEZ
District 19 (Middlesex)
Assemblyman JAY WEBBER
District 26 (Essex, Morris and Passaic)
Co-Sponsored by:
Assemblywoman Chaparro
SYNOPSIS
Provides gross income tax deduction for certain home elevation expenses.
CURRENT VERSION OF TEXT
As introduced.
An Act providing a gross income tax deduction for certain home elevation expenses and supplementing Title 54A of the New Jersey Statutes
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. For taxable years beginning on or after January 1, 2016 but before January 1, 2019, a qualified taxpayer shall be allowed to deduct from the taxpayer’s gross income for the taxable year, an amount equal to 25 percent of the qualified expenses paid in the taxable year to a registered home elevation contractor for elevating the taxpayer’s primary residence.
b. As used in this section:
“Qualified expenses” means expenses paid for jacking and resetting only, exclusive of costs for construction, disconnecting and re-connecting utilities, building a new foundation, painting, landscaping, re-attaching porches or decks and similar attendant home elevation services.
“Qualified home elevation contractor” means a home elevation contractor registered with the Division of Consumer Affairs and in compliance with all applicable laws and regulations.
“Qualified taxpayer” means a resident taxpayer whose primary residence in the State is located in a Special Flood Hazard Area as identified on the current Flood Insurance Rate Map (FIRM) or Preliminary Work Map issued by the Federal Emergency Management Agency (FEMA), and whose primary residence before home elevation is undertaken is below the base flood elevation on the current Flood Insurance Rate Map or Preliminary Work Map.
c. A taxpayer who benefits from home elevation assistance through the Flood Mitigation Assistance, Pre-Disaster Mitigation, or Hazard Mitigation Grant Programs funded by FEMA, or Increased Cost of Compliance coverage under the National Flood Insurance Program, or the New Jersey Low-to-Moderate Income Homeowners Rebuilding Program shall not be eligible to claim the deduction provided by this section.
2. This act shall take effect immediately.
STATEMENT
This bill provides a gross income tax deduction for a portion of the home elevation expenses paid in the taxable year by certain taxpayers who reside in areas designated by FEMA as special flood hazard areas. This deduction, which would be available for taxable years beginning before January 1, 2019, would be equal to 25% of the expenses paid by the taxpayer for jacking and resetting services provided by a qualified home elevation contractor.
Jacking and resetting alone, the “elevation” component of the full home elevation service, can cost between $12,000 and $30,000 depending on the size and complexity of the home, while complete full service turn-key costs for home elevation can total between $40,000 and $150,000.
The purpose of the bill is to assist taxpayers who will in the near future either be newly required to obtain flood insurance, or face considerable increases in the cost of their flood insurance under the National Flood Insurance Plan, by allowing them to deduct a portion of the costs incurred for home elevation. As of early 2016, there are FEMA-issued preliminary Flood Insurance Rate Maps or Preliminary Work Maps for the coastal, bayshore and riverine counties of the State, allowing homeowners the opportunity to compare the current elevation of their homes to preliminary FEMA base flood elevations. When the Flood Insurance Rate Maps are eventually finalized and become effective through adoption by the localities, the flood insurance premiums of homeowners whose homes are below FEMA base flood elevations will increase substantially. Homeowners who reside in areas newly designated by FEMA as Special Flood Hazard Areas will be required to carry flood insurance when the Flood Insurance Rate Maps become effective. By elevating their homes to or above FEMA base flood elevations, they will qualify for lower flood insurance premiums.
Taxpayers that benefit from home elevation assistance under certain FEMA-funded grant programs, Increased Cost of Compliance coverage, or the New Jersey Low-to-Moderate Income Homeowners Rebuilding Program are not eligible to claim the deduction. The deduction provided by this bill is temporary, giving qualified taxpayers an incentive to elevate their homes before an increase in flood insurance premiums, or obligation to carry flood insurance for those newly located in a Special Flood Hazard Area, officially takes effect.
The gross income tax deduction provided by this bill will assist certain taxpayers to offset some of the considerable costs of home elevation. By elevating their homes, those taxpayers will pay significantly less for flood insurance than they otherwise would when the FEMA Flood Insurance Rate Maps become effective.