(TRENTON) – Legislation sponsored by Assemblyman Craig Coughlin to provide gross income tax deduction for certain home elevation expenses was approved on Thursday by the Assembly Environment and Solid Waste Committee.
The bill (A-3669) provides a temporary, 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. The deduction, which would be available for taxable years 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 a residents’ home,” said Coughlin (D-Middlesex). “Completing full service turn-key costs for home elevation can total between $40,000 and $150,000.”
“This bill aims to assist taxpayers who will be required to obtain flood insurance, or face considerable increases in the cost of their flood insurance by permitting them a deduction on their income tax. The bill not only provides incentive to raise eligible homeowners’ homes at or above the proposed FEMA elevation levels, but also will help homeowners avoid the new or increased premiums altogether.”
As of early 2016, there are FEMA-issued preliminary Flood Insurance Rate Maps or Preliminary Work Maps for the coastal, bay-shore and riverine counties of the state, allowing homeowners the opportunity to compare the current elevation of their homes to preliminary FEMA base flood elevations. According to the bill, when the rate maps are finalized and become effective through adoption by localities, the flood insurance premiums of homeowners whose homes are below FEMA base flood elevations will increase substantially.
“After weathering a few storms, the last thing homeowners along the coastline deserve is an increased burden of higher flood insurance payments,” Coughlin continued. “This bill, if enacted, will help residents at a time they will truly need it.”
Taxpayers who 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 would not be eligible to claim the deduction.
The bill now awaits further consideration by the Assembly Speaker.