Provides Refundable Income Tax Credit for Early Principal Payments on Mortgages
TRENTON – Senator Troy Singleton today introduced legislation to create a tax credit program that rewards middle-class families that choose to pay down the principal amounts of their home mortgages early. The bill is modeled on federal legislation referred to as the Building Equity for the American Middle-Class Act (BEAM Act) that will encourage families to build equity in their home, pay down their home mortgage more quickly, thus creating more wealth while securing the American dream of homeownership.
“Home ownership is part of the American Dream, yet for too many families purchasing and maintaining a home seems out of reach,” said Senator Singleton (D-Burlington). “Providing assistance to help homeowners build equity and pay down their mortgages more quickly will provide greater economic security and flexibility to residents over the long term. This is a policy geared toward giving middle-class families the financial relief they deserve.”
The legislation would provide for a refundable gross income tax credit for 50% of early home mortgage principal payments that taxpayers make in addition to their required monthly mortgage payments. The annual refundable tax credit is allowed up to $1,000 per year and can be claimed for up to 10 taxable years.
Mortgages eligible for the tax credit are purchase money mortgages or refinanced purchase money mortgages that must: (1) be for a primary residence; (2) be for a term between 15 and 30 years; and (3) require payments that are each the same amount and made in equal intervals during the term of the mortgage.
The $1,000 limit on the amount of the credit phases down for single taxpayers who have taxable income between $125,000 and $135,000 and for married filing jointly who have taxable income between $250,000 and $270,000. No credit is allowed for single taxpayers with taxable income over $135,000 and for married individuals filing jointly with taxable income over $270,000.