Allows projects supported by State or municipal affordable housing trust fund to be exempt from property tax and to instead contribute to municipal services by making payments in lieu of taxation.

Property tax relief for affordable housing

Beginning March 20, 2024, New Jersey towns can adopt ordinances granting property tax exemptions to qualifying affordable housing. Projects must receive at least some funding from the New Jersey Affordable Housing Trust Fund or municipal affordable housing development fees. Sponsors must agree to make payments for town services instead of property taxes. Annual payments can reach 20% of gross revenue, which includes rent, carrying charges, and other project income. Generally, the minimum is the greater of 4% of gross revenue or land-value taxes for the year before mortgage recording. For farmland-assessed property, the minimum is 4% of gross revenue. For agreements signed between mortgage recording and substantial completion, payments cannot exceed site taxes for the year before mortgage recording. The exemption generally ends when the eligible loan is paid off. Towns can extend or grant exemptions after payoff or expiration while qualifying subsidized housing remains under specified affordability controls. These include project-based federal or State aid, New Jersey Uniform Housing Affordability Controls, or federal Low Income Housing Tax Credit rent and income limits. The tax relief goes to housing projects and does not guarantee lower rents for residents.