A new refundable tax credit is available in 2020 for all Nebraska taxpayers that paid real estate taxes in 2020.
The Nebraska Property Tax Incentive Act provides that, for taxable years beginning on or after January 1, 2020, taxpayers that pay school district taxes during a taxable year are allowed a refundable credit against the state income or franchise tax.
The credit is a percentage set by the Nebraska Department of Revenue. For calendar year 2020, the credit percentage will be set so that the total amount of credits for the taxable year is $125 million. The 2020 percentage is 6 percent of school district taxes paid in 2020. Subsequent calendar years call for an increase in the credit as provided by the statute.
Eligible taxpayers include individuals, corporations, partnerships, limited liability companies (LLCs), trusts, estates or any entity paying school district taxes.
Nebraska Form PTC – Nebraska Property Tax Incentive Act Credit Computation
Form PTC must be filed by all taxpayers claiming the credit and by any partnership, S corporation, fiduciary or LLC distributing school district property taxes paid to its owners. Form PTC is used to identify parcels and compute the amount of credit that can be claimed on a taxpayer’s Nebraska tax return.
The credit information is obtained by accessing the Nebraska School District Property Tax Look-Up Tool provided by the Nebraska Department of Revenue. (https://ndr-1107parcel.ne.gov/parcelldLookup/faces/search.xhtml). The look-up tool calculates the amount of real estate tax that is eligible for the credit.
For most individual taxpayers, Labenz & Associates LLC will plan on using the look-up tool to determine individual and/or an entity’s property taxes eligible for the credit based on the taxpayer’s home or office address. If you, or an entity you are involved with, have multiple parcels of real estate, pays real estate taxes as a tenant or have real estate titled under other names, or in multiple Nebraska counties, then Labenz & Associates LLC will need your help ensuring the proper amount of credit is claimed.
Each partnership, S corporation, fiduciary or LLC must provide its owners or beneficiaries with the information necessary to compute their share of the credit on their respective tax returns.
The process to claim the credit is a bit cumbersome. For each parcel of real estate that a taxpayer paid real estate tax in 2020, we will need the following information:
- County where real estate is located.
- Parcel Identification Number (ID).
- Date the real estate tax was paid.
- Property tax year (multiple years could have been paid in 2020).
If its simpler, please make a copy of either your 2019 or 2020 Nebraska real estate tax statement(s) to send along with your tax information.
Other Property Tax Rules
A credit may be claimed by a taxpayer only if that taxpayer paid the taxes on the parcel. If a tenant pays the tax on behalf of the owner, then the credit can only be claimed by the tenant.
The property tax is considered paid on the date it is received by the county treasurer where the parcel is located. If a payment is mailed on December 31, it is considered a deduction for income tax purposes, but is not eligible for the credit because it would not be received by the county treasurer until the following calendar year.
When a parcel is sold, then the amount eligible for the credit will be in proportion to the ownership days in the property tax year.
When a parcel is owned by more than one taxpayer, then the tax paid will be based on ownership percentage during the property tax year.
* * * * * * *
Although the Nebraska Legislature passed a bill with good intentions and to provide property tax relief to Nebraska taxpayers, the implementation of the property tax relief is burdensome and complicated. If you have questions regarding the Nebraska Property Tax Incentive Act Credit, please contact our office. We are happy to assist you.