Bill Text: NJ S2391 | 2024-2025 | Regular Session | Introduced
Bill Title: "Homeowners' Historic Property Reinvestment Act"; allows homeowners to claim credit against gross income tax for certain costs of rehabilitating historic properties.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced) 2024-01-29 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S2391 Detail]
Download: New_Jersey-2024-S2391-Introduced.html
Sponsored by:
Senator SHIRLEY K. TURNER
District 15 (Hunterdon and Mercer)
SYNOPSIS
"Homeowners' Historic Property Reinvestment Act"; allows homeowners to claim credit against gross income tax for certain costs of rehabilitating historic properties.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing homeowners to claim a credit against the gross income tax for certain costs of rehabilitating historic properties, supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Homeowners' Historic Property Reinvestment Act."
2. As used in this act:
"Cost of rehabilitation" means the consideration given, valued in money, whether given in money or otherwise, for the materials and services which constitute the rehabilitation.
"Director" means the Director of the Division of Taxation in the Department of the Treasury.
"Officer" means the State Historic Preservation Officer or the official within the State designated by the Governor or by statute in accordance with the provisions of chapter 3023 of Title 54, United States Code (54 U.S.C. s.302301 et seq.), to act as liaison for the purpose of administering historic preservation programs in the State.
"Principal residence" means a one- or two-family homestead actually and continually occupied by an individual as the individual's permanent residence, as distinguished from a vacation home, property owned and rented or offered for rent by the individual, and other secondary real property holdings, except that the permanent residence of military personnel called to active duty shall be considered to be a principal residence so long as the individual maintains ownership of the residence for which the credit is sought.
"Property" means a structure, including its site improvements and landscape features, assessed as real property, and used for a residential purpose, residential rental purpose, commercial purpose, or any combination thereof.
"Qualified property" means a property located in the State of New Jersey that is:
a. (1) individually listed, or located in a district listed on the National Register of Historic Places in accordance with the provisions of chapter 3021 of Title 54, United States Code (54 U.S.C. s.302101 et seq.), or on the New Jersey Register of Historic Places pursuant to P.L.1970, c.268 (C.13:1B-15.128 et seq.), or individually designated, or located in a district designated, by the Pinelands Commission as a historic resource of significance to the Pinelands in accordance with the Pinelands comprehensive management plan adopted pursuant to the "Pinelands Protection Act," P.L.1979, c.111 (C.13:18A-1 et seq.), and
(2) if located within a district, certified by either the officer or the Pinelands Commission, as appropriate, as contributing to the historic significance of the district; or
b. (1) individually identified or registered, or located in a district composed of properties identified or registered, for protection as significant historic resources in accordance with criteria established by a municipality in which the property or district is located if the criteria for identification or registration has been approved by the officer as suitable for substantially achieving the purpose of preserving and rehabilitating buildings of historic significance within the jurisdiction of the municipality, and
(2) if located within a district, certified by the officer as contributing to the historic significance of the district. "Rehabilitation" means the repair or reconstruction of the exterior or interior of a qualified property to make an efficient contemporary use possible while preserving the portions or features of the property that have significant historical, architectural, and cultural values.
"Rehabilitation of the interior of the qualified property" means the repair or reconstruction of the structural or substrate components and electrical, plumbing, and heating components within the interior of a qualified property.
3. a. An individual, upon successful application to the officer, shall be allowed a credit against the tax otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount equal to 25 percent of the cost of rehabilitation paid by the individual for the rehabilitation of a qualified property that the individual owns and occupies as the individual's principal residence for a period of twelve consecutive months following the completion of the rehabilitation, provided that: (1) the cost of rehabilitation is in an amount not less than 50 percent of the equalized assessed value of the structure for local real estate tax purposes as indicated on the most recent property tax bill for the qualified property prior to the start of the rehabilitation; and (2) for the purpose of calculating the amount of the total credit, no more than 60 percent of the total cost of rehabilitation shall be attributable to interior rehabilitation.
If more than one individual owns a qualified property and at least one of the owners occupies the qualified property as the owner's principal residence for a period of twelve consecutive months following the completion of the rehabilitation, each owner shall be allowed a credit against the tax otherwise due pursuant to N.J.S.54A:1-1 et seq. in an amount equal to 25 percent of the cost of rehabilitation paid by each respective owner for the rehabilitation of the qualified property, provided that: (1) the total cost of rehabilitation of the qualified property borne by all owners is in an amount not less than 50 percent of the equalized assessed value of the structure for local real estate tax purposes as indicated on the most recent property tax bill for the qualified property prior to the start of the rehabilitation; and (2) for the purpose of calculating the amount of the total credit, no more than 60 percent of the total cost of rehabilitation of the qualified property borne by all owners shall be attributable to interior rehabilitation.
b. The amount of the credit allowable under this section shall be applied against the tax otherwise due pursuant to N.J.S.54A:1-1 et seq. for the taxable year in which the officer issues the tax credit certification. The director shall determine the order in which the credit allowed under this section and any other credit permitted by law shall be applied against the individual's amount of tax due. If the amount of the credit exceeds the individual's tax liability, that amount of excess shall be considered an overpayment and shall be refunded to the taxpayer in the manner provided by subsection (a) of N.J.S. 54A:9-7.
c. The cumulative amount of tax credits granted under this section for the cost of rehabilitation of a specific qualified property shall not exceed $25,000 within any ten-year period.
4. a. The officer shall, in consultation with the director, promulgate rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as the officer deems necessary to administer the provisions of this act, including but not limited to rules establishing administrative fees to implement the provisions of this act and the setting of an annual application submission date.
b. For every tax credit allowed pursuant to section 3 of this act, the officer shall certify to the director the total cost of rehabilitation; that the property meets the definition of qualified property; that the rehabilitation has been completed in substantial compliance with the requirements of the Secretary of the Interior's Standards for Rehabilitation pursuant to section 67.7 of Title 36, Code of Federal Regulations; and, if applicable, that no more than 60 percent of the cost of rehabilitation which will be used to calculate the credit is for the rehabilitation of the interior of the qualified property. The individual shall attach the certification to the tax return on which the individual claims the credit.
c. The total amount of credits approved by the officer pursuant to this act shall not exceed $15,000,000.
5. a. The officer, in collaboration with the director, shall adopt rules for the recapture of an individual's entire or partial tax credit amount allowed under this act. The rules shall require the officer to notify the director of the recapture of an entire or partial tax credit amount. The recapture of funds shall be subject to the State Uniform Tax Procedure Law, R.S.54:48-1 et seq., and recaptured funds shall be deposited in the Property Tax Relief Fund of the State.
b. If, before the end of five full years after the completion of the rehabilitation of the qualified property, an individual who has been allowed a tax credit pursuant to section 3 of this act modifies the architectural components of the rehabilitated qualified property so that it ceases to meet the requirements for the rehabilitation of a qualified property as defined in this act, then the tax liability of the individual for that taxable year shall be increased by the following percentage of that portion of the original tax credit amount that the officer now disallows:
(1) 100 percent of the disallowed tax credit amount if the action causing the disallowance occurs within the first full year after the rehabilitation's completion;
(2) 80 percent of the disallowed tax credit amount if the action causing the disallowance occurs between the first and second full year after the rehabilitation's completion;
(3) 60 percent of the disallowed tax credit amount if the action causing the disallowance occurs between the second and third full year after the rehabilitation's completion;
(4) 40 percent of the disallowed tax credit amount if the action causing the disallowance occurs between the third and fourth full year after the rehabilitation's completion; and
(5) 20 percent of the disallowed tax credit amount if the action causing the disallowance occurs between the fourth and fifth full year after the rehabilitation's completion.
c. Any tax credit award that is recaptured pursuant to this section shall be reallocated in succeeding years and shall not count against the cap set forth in subsection c. of section 4 of this act.
6. On or before December 31 of the fourth year following the effective date of this act, the officer, in consultation with the director, shall prepare and submit a written report regarding the number and total monetary amount of tax credits granted for the rehabilitation of qualified properties pursuant to section 3 of this act, the geographical distribution of the credits granted, an evaluation of the effectiveness of the tax credits provided pursuant to this act in promoting the rehabilitation of historic properties, recommendations for administrative or legislative changes to increase the effectiveness of the program, and any other information that the officer or the director may deem useful or appropriate. This report shall be submitted to the Governor and to the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1).
7. This act shall take
effect immediately and apply to taxable years beginning on or after January 1
next following the date of enactment.
STATEMENT
This bill establishes the "Homeowners' Historic Property Reinvestment Act." The bill allows homeowners to claim a refundable credit against gross income tax in an amount equal to 25 percent of the homeowner's outlay for rehabilitating a historic property in this State. The credit is capped at $25,000 per property during a ten-year period. To qualify for the credit, a property that is to be rehabilitated is required to meet certain criteria, as specified in the bill.
The bill requires a homeowner seeking a tax credit under the bill to spend no more than 60 percent of the cost of rehabilitation on interior rehabilitation and to own and occupy the qualified property as the homeowner's principal residence for twelve consecutive months following the completion of the rehabilitation. The bill requires rehabilitation expenditures to be at least 50 percent of the equalized assessed value of the structure for local real estate tax purposes as indicated on the most recent property tax bill for the property prior to the start of the rehabilitation.
The bill provides that the cumulative amount of tax credits approved cannot exceed $15 million.
The bill requires the State Historic Preservation Officer, in consultation with the director of the Division of Taxation, to prepare and submit a written report to the Governor and the Legislature on or before December 31st of the fourth year following the bill's effective date. The report would detail the number and total monetary amount of tax credits granted for the rehabilitation of qualified properties, the geographical distribution of the credits granted, an evaluation of the effectiveness of the tax credits in promoting the rehabilitation of historic properties, recommendations for administrative or legislative changes to increase the effectiveness of the program, and any other information that the officer or the director may deem useful or appropriate.
