Bill Text: NJ A197 | 2024-2025 | Regular Session | Introduced
Bill Title: Provides gross income tax deduction for amounts paid to taxpayers for sale of certain real property interests for conservation purposes.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Appropriations Committee [A197 Detail]
Download: New_Jersey-2024-A197-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblywoman DAWN FANTASIA
District 24 (Morris, Sussex and Warren)
Assemblyman MICHAEL INGANAMORT
District 24 (Morris, Sussex and Warren)
SYNOPSIS
Provides gross income tax deduction for amounts paid to taxpayers for sale of certain real property interests for conservation purposes.
CURRENT VERSION OF TEXT
As introduced.
An Act providing a gross income tax deduction for the consideration paid to taxpayers for certain sales of certain interests in real property to conservation organizations, supplementing chapter 3 of Title 54A of the New Jersey Statutes and amending P.L.1999, c.372.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) a. A taxpayer shall be allowed a deduction against gross income for a portion of the consideration received by the taxpayer for the sale of an interest in real property in this State by the taxpayer to a qualified organization for conservation purposes. The sale may be a full market value sale or a bargain sale. A deduction allowed for a bargain sale pursuant to this section shall not preclude the taxpayer from being allowed a deduction for a qualified conservation contribution for the transfer of the same real property interest if the requirements of section 1 of P.L.1999, c.372 (C.54A:3-6) are also satisfied. The amount of the deduction under this section shall be equal to the capital gain realized by the taxpayer as determined for federal income tax purposes. If the sale is a bargain sale, the taxpayer donor shall allocate the property's cost basis between the gift element and the sale element, based on the fair market value of each part.
b. As used in this section:
"Bargain sale" means a transaction in which a donor receives less than the full market value of the real property interest transferred to the conservation organization and the transaction may be treated for federal income tax purposes in part as a sale, and in part as a charitable donation, with the donor's basis allocated proportionally between the gift amount and the sale amount as is applicable pursuant to 26 C.F.R. s.1.1011-2.
"Full market value sale" means a transfer of a real estate interest generally at a price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.
"Qualified organization" means "qualified organization" as that term is used in paragraph (3) of subsection (h) of section 170 of the federal Internal Revenue Code, 26 U.S.C. s.170, and shall include but not be limited to a governmental unit, charitable trust, foundation or charitable non-profit organization that participates in the Green Acres program, Blue Acres program, farmland preservation program, historic preservation program, the Highlands Transfer Development Rights Program, a park or forestry or an open space and recreation space preservation or conservation program, or a wildlife, hunting or fishing conservation and restoration program including but not limited to programs funded pursuant to the Federal Aid in Wildlife Restoration Act, 16 U.S.C. s.669 et seq. and the FederalAid in Sport Fish Restoration Act, (16 U.S.C. s.777 et seq.), and the Sportfishing and Boating Safety Act of 1998 (16 U.S.C. ss.777c-777g).
2. Section 1 of P.L.1999, c.372 (C.54A:3-6) is amended to read as follows:
1. A taxpayer shall be allowed a deduction against gross income for a qualified conservation contribution, as defined under subsection (h) of section 170 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.170, made by the taxpayer of a qualified real property interest in property located in this State. The amount of the deduction in a taxable year shall be equal to the amount of the contribution allowed in the taxable year as a deduction pursuant to section 170 of the federal Internal Revenue Code of 1986 in computing the taxpayer's taxable income for federal income tax purposes. A taxpayer shall be allowed a deduction under this section for the charitable donation portion of the interest in real property owned by the taxpayer that is transferred as part of a bargain sale of the interest in real property for which a deduction is allowed for pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).
(cf: P.L.1999, c.372, s.1)
3. This act shall take effect immediately and shall apply to taxable years beginning after the date of enactment.
STATEMENT
This bill provides for a gross income tax deduction for amounts paid to taxpayers in exchange for their sale of certain real property interests for conservation purposes. The New Jersey gross income tax provides a deduction for a charitable, qualified conservation contribution of real property interests for land preservation purposes modeled on the similar federal income tax deduction which covers full land interest sales and restricted land use easements. But land interest sales in New Jersey to various conservation programs for which a purchase price is paid to the New Jersey taxpayer can result in taxable gains for those New Jersey sellers who need to garner some investment income from these sales. To allow a deduction for these transfers with preservation or conservation restrictions on the real estate can prevent developers from buying up environmentally valuable land in this State and benefit both the taxpayer and the residents of the State at large.
The bill will allow the deductions for both parts of some mixed transfers referred to as bargain sales in which there is both a charitable donation aspect and a cash purchase payment for less than the land's fair market value (FMV). The donation value is the difference between the FMV and the cash payment. In a bargain sale, a real estate owner is both a seller (for the cash portion) and a donor (for the donated portion) of the real estate interest. The bill will also allow a deduction for full market value sales to conservation organization which include certain governmental programs and non-profit run preservation programs. These programs will include but not be limited to those run by a governmental unit, charitable trust, foundation or charitable non-profit organization that participates in a Green Acres program, Blue Acres program, farmland preservation program, historic preservation program, the Highlands Transfer Development Rights Program, a park or forestry or an open space and recreation space preservation or conservation program or a wildlife, hunting or fishing conservation and restoration program.
