Bill Text: NJ S1734 | 2010-2011 | Regular Session | Introduced
Bill Title: Allows a gross income tax credit to certain taxpayers for capital improvements made to a principal residence.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-03-11 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S1734 Detail]
Download: New_Jersey-2010-S1734-Introduced.html
Sponsored by:
Senator RONALD L. RICE
District 28 (Essex)
SYNOPSIS
Allows a gross income tax credit to certain taxpayers for capital improvements made to principal residence.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing a gross income tax credit to certain taxpayers for capital improvements made to a principal residence and supplementing chapter 4 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. An eligible taxpayer shall be allowed a credit against the tax otherwise due under the New Jersey gross income tax, N.J.S.54A:1-1 et seq., in an amount equal to ten percent of the cost to the taxpayer of improvements made to a principal residence in the taxable year.
b. As used in this section:
"Eligible taxpayer" means an individual who:
(1) as a renter or homeowner, has made a contribution to the fabric, social structure and finances of one or more communities in this State, as demonstrated through the payment of property taxes directly, or through rent, on any homestead or rental unit used as a principal residence in this State for at least five consecutive years at least two of which have been as owner of the homestead for which a credit is sought; and
(2) has a gross income equal to or less than the mean gross income of all returns filed for the taxable year ending December 31 two years preceding the taxable year for which the credit is sought, as determined by the director.
"Improvements" mean capital expenses of $5,000 or more which materially add to the value of a homestead, considerably prolong the useful life of a homestead, or adapt a homestead to new uses and increase the original basis of a homestead, as distinguished from repairs which maintain a homestead in an ordinary, efficient operating condition.
"Principal residence" means a one- or two-family homestead actually and continually occupied by the taxpayer as the taxpayer's permanent residence, as distinguished from a vacation home, property owned and rented or offered for rent by the taxpayer, and other secondary real property holdings, except that military personnel called to active duty shall be excluded so long as the taxpayer maintains ownership of the residence for which the credit is sought.
c. No taxpayer shall be allowed a credit under this section for more than one taxable year. In the case of a husband and wife who elect to file separate tax returns, each shall be entitled to one-half of the allowable credit provided at least one spouse qualifies as an "eligible taxpayer" and provided the combined gross income of their separately filed returns meets the qualifications established under paragraph (2) of the definition of "eligible taxpayer".
d. A taxpayer who shall have been allowed an amount of credit under the provisions of this section who terminates occupation of the property as a principal residence within three years following the end of the taxable year for which the amount of credit is allowed, shall be liable for the tax in an amount equal to the amount of credit previously so allowed and the limitation of subsection (a) of N.J.S.54A:9-4 shall not apply to that amount.
e. The amount of the credit allowed pursuant to this section shall be applied against the tax otherwise due under N.J.S.54A:1-1 et seq., after all other credits and payments. If the credit exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54A:9-7; provided however, that subsection (f) of N.J.S.54A:9-7 shall not apply.
2. This act shall take effect immediately and shall apply to taxable years beginning on or after the January 1 next following the date of enactment.
STATEMENT
This bill would provide middle- and low-income taxpayers a gross income tax credit of ten percent of the cost to the taxpayer of improvements made to the taxpayer's principal one or two-family residence. In order to qualify for the credit, an improvement would have to represent a minimum capital investment of $5,000 for the year and must materially add to the value of the home, considerably prolong the useful life of the home, or adapt the home to new uses and increase the original basis of the home.
The bill limits eligibility for a credit to taxpayers with an income equal to or less than the mean gross income of all returns filed in the tax year ending December 31 two years preceding the year in which the credit is sought, which was $79,203 in taxable year 2007. To be eligible, a taxpayer must have also contributed to one or more communities in this State as a local property taxpayer, either as a renter or a homeowner, for at least five consecutive years, at least two of which as owner of the residence for which a credit is sought. Spouses who elect to file separate returns would each be entitled to one-half of the allowable credit, provided that at least one of the spouses meets the specified residency requirements and that their combined gross incomes satisfy the gross income requirement. A penalty equal to the amount of the allowable credit is imposed on a taxpayer who terminates residency within three years of taking the credit.
