Most homes were not designed to support us as we age. So, it's no surprise that our home will require modification as our needs change over time.
All over New Jersey we hear a constant refrain, "the costs of owning my home just seem to keep going up!"
Why is this? One of the biggest culprits is property taxes. With a rate of over 2% , New Jersey’s tax rate is the highest in the nation. The average monthly bill of $600 is enough to swallow 30% of the average social security check.
Why are property taxes so high in New Jersey? For the last two decades, the cost of essential services such as road maintenance, the police force, and public schools have increasingly been pushed down to the local, municipal level. The bureaucracy is also quite large and fragmented. Across just 21 counties, New Jersey has 565 municipalities—each with their own administrative team.
So how can a retired person in New Jersey on a fixed income manage their property taxes, short of moving to Florida? Here are a few options:
take advantage of the Senior Freeze program
The Senior Freeze program is designed to provide property tax relief for New Jersey homeowners who are elderly or disabled. If you have lived in your home for at least three years,are not behind in your property taxes, and have an income under $70,000 a year(as of 2008), you may qualify for a reimbursement. This reimbursement amounts too the difference between your current year’s property taxes and what you paid the first year you owned your home.. Keep in mind, if you co-own your property with someone other than your spouse, you can only receive a partial reimbursement.There is also a proposal in the works to change the Senior Freeze from a reimbursement to a credit, which may help both the recipients and the state.
In addition, New Jersey has a Homestead Benefit for certain households for those over 65 who have an income lower than $150,000.
challenge the assessment of your home’s value
Although the tax rate is out of your control, it is possible to contact your municipal government’s office to argue that the tax assessor has overvalued your home. You can use the sales prices of other nearby homes to make your case. It's also a good idea to get a copy of your home's tax record and check it for errors. Sometimes there are mistakes in the age of the property, or the record may list improvements that were never made. You may need a real estate attorney to make your case. These attorneys oftentimes work for a share of your tax savings instead of charging upfront fees.
move to a place with lower property taxes
Moving out of town or state can be costly, but if property taxes are squeezing your wallet, they are also being factored into local rental costs as well. This option is certainly worth considering if you have already decided to downsize.
No matter what type of solution you find, the most important thing is to find one! Property taxes are a serious concern for senior homeowners, and failure to pay them can lead to foreclosure. So if you’re a New Jersey homeowner with home ownership costs on the rise, tackle the property taxes. It can only save you money.
When researching home equity financing, one can be inundated with all kinds of terminology and acronyms. Hopefully, we here at Irene can help seniors wade through some of the terms that matter most as they move towards using their home equity for more financial freedom. Two of the most common terms seniors discover are DTI and CLTV.