S1416

SENATE, No. 1416

STATE OF NEW JERSEY

211th LEGISLATURE

INTRODUCED MARCH 29, 2004

Sponsored by:

Senator SHIRLEY K. TURNER

District 15 (Mercer)

Senator BARBARA BUONO

District 18 (Middlesex)

Co-Sponsored by:

Senators Asselta, Littell, Cardinale, Kyrillos, T.Kean and Sweeney

SYNOPSIS

Provides credit under gross income tax and corporation business tax for certain costs of rehabilitating historic properties.

CURRENT VERSION OF TEXT

As introduced.

(Sponsorship Updated As Of: 11/9/2004)

An Act providing a credit against the gross income tax and the corporation business tax for certain costs of rehabilitating historic properties, and supplementing chapter 4 of Title 54A of the New Jersey Statutes and P.L.1945, c.162 (C.54:10A-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be sited as the "Historic Property Reinvestment Act."

2. a. As used in this section:

"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.

"Property" means a structure, including its site improvements and landscape features, assessed as real property, and used for a residential purpose or commercial purpose, or both.

"Qualified property" means a property located in the State of New Jersey that is:

(1) owned and occupied for a period of twelve consecutive months either prior to rehabilitation or following the completion of the rehabilitation, or both, as the taxpayer's principal place of residence or as the principal place where the taxpayer conducts a business, financial operation or venture, or both;

(2) (a) (i) individually listed, or located in a district listed, on the National Register of Historic Places in accordance with the "National Historic Preservation Act," Pub.L.89-665 (16 U.S.C.§470 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 an 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

(ii) if located within a district, certified by either the State Historic Preservation Officer or the Pinelands Commission, as appropriate, as contributing to the historic significance of the district; or

(b) (i) 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 State Historic Preservation Officer as suitable for substantially achieving the purpose of preserving and rehabilitating buildings of historic significance within the jurisdiction of the municipality, and

(ii) if located within a district, certified by the State Historic Preservation 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 a 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.

"State Historic Preservation Officer" means the official within the State designated by the Governor or by statute in accordance with the provisions of the "National Historic Preservation Act," Pub.L.89-665 (16 U.S.C. §470 et seq.), to act as liaison for the purpose of administering historic preservation programs in the State.

b. A taxpayer shall be allowed a credit against the tax otherwise due pursuant to N.J.S.54A:1-1 et seq. for 25 percent of the cost of rehabilitation paid by the taxpayer for the rehabilitation of a qualified property. If a qualified property is owned by more than one taxpayer, each taxpayer owner shall be allowed a credit against the tax otherwise due pursuant to N.J.S.54A:1-1 et seq. for 25 percent of the cost of the rehabilitation actually paid by the taxpayer. For the purpose of calculating the amount of credit, no more than 40 percent of the cost of rehabilitation shall be attributable to the cost for the rehabilitation of the interior of the qualified property.

If the taxpayer is a partner in a partnership, a member of an association or a shareholder in a New Jersey S corporation, the credit shall be allocated to each partner of the partnership, member of the association or shareholder in the New Jersey S corporation in proportion to the partner's, member’s or shareholder's share of the income or gain received by the partnership, association or New Jersey S corporation for its taxable year ending within or with the partner's, member’s or shareholder's taxable year.

c. The amount of the credit shall be applied during the taxable year in which the final payment for the cost of the rehabilitation is made by the taxpayer against any tax liability otherwise due after any other credits permitted pursuant to law have been applied. If the credit reduces the taxpayer's tax liability to zero, the remaining amount of the credit shall not be considered an overpayment of the tax. If the amount of the credit otherwise allowable under this section in a taxable year exceeds the tax liability for the taxable year, the amount that exceeds the tax liability may be carried over for credit against the tax liability of the taxpayer in the next two taxable years or until the full credit is used, whichever occurs first.

d. The total credit taken by a taxpayer, including any carryforward credit, within any ten year period for the cost of rehabilitation of a qualified property shall not exceed $5,000. If more than one taxpayer takes a credit for the cost of rehabilitation of a qualified property, the total of the credits taken by all taxpayers for rehabilitation of that qualified property, including carryforward credits, within any ten year period shall not exceed $5,000.

e. To claim the credit authorized under this section, a taxpayer shall apply to the State Historic Preservation officer for certification of credit eligibility. The officer shall certify to the Division of Taxation the total cost of rehabilitation, that the property meets the definition of qualified property, that no more than 40 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 and that the rehabilitation has been completed in substantial compliance with the requirements of the Secretary of the Interior's Standards of Rehabilitation, 36 C.F.R. §67.7 The taxpayer shall attach the certification to the tax return on which the credit is claimed.

f. If a taxpayer who is eligible for the credit provided by this section sells the qualified property before receiving any or all of the credit allowed, the succeeding owner of the qualified property shall be allowed a credit against the tax otherwise due pursuant to N.J.S.54A:1-1 et. seq. to the extent of the amount of the credit, either total or partial, not taken by the taxpayer who paid for the cost of rehabilitation, in the same manner as the credit could have been taken by that original taxpayer.

g. The director shall promulgate, in consultation with the Commissioner of the Department of Environmental Protection, rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are deemed necessary to administer the provisions of this act.

3. a. As used in this section:

"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.

"Property" means a structure, including its site improvements and landscape features, assessed as real property, and used for a commercial purpose or both a residential and commercial purpose.

"Qualified property" means a property located in the State of New Jersey that is:

(1) occupied for a period of twelve consecutive months either prior to rehabilitation or following the completion of the rehabilitation, or both, as the principal place where the taxpayer conducts a business, financial operation, or commercial venture;

(2) (a) (i) individually listed, or located in a district listed, on the National Register of Historic Places in accordance with the "National Historic Preservation Act," Pub.L.89-665 (16 U.S.C. §470 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 an 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

(ii) if located within a district, certified by the State Historic Preservation Officer as contributing to the historic significance of the district.

b. A taxpayer shall be allowed a credit against the tax otherwise due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for 25 percent of the cost of rehabilitation paid by the taxpayer for the rehabilitation of a qualified property during the fiscal or calendar accounting year. The amount of the credit claimed in the fiscal or calendar accounting year in which the cost is incurred shall not reduce the amount of the tax liability to less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). For the purpose of calculating the amount of credit, no more than 40 percent of the cost of rehabilitation shall be attributable to the cost for the rehabilitation of the interior of the qualified property.

c. A taxpayer may claim a credit during the fiscal or calendar accounting year in which the final payment for the cost of the rehabilitation is made by the taxpayer against any tax liability otherwise due after any other credits permitted pursuant to law have been applied. The amount of credit claimed in an accounting year that cannot be applied for that accounting year due to limitations in this section may be carried over, if necessary, to the two accounting years following a credit's accounting year or until the full credit is used, whichever occurs first.

d. The total credit taken by a taxpayer, including any carryforward credit, within any ten year period for the cost of rehabilitation of a qualified property shall not exceed $10,000.

f. The director shall promulgate, in consultation with the Commissioner of the Department of Environmental Protection, rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are deemed necessary to administer the provisions of this section.

4. This act shall take effect immediately and section 2 shall apply to taxable years beginning on or after January 1 next following the date of enactment of this act, and section 3 shall apply to fiscal or calendar accounting years beginning on or after July 1 next following the date of enactment of this act.

STATEMENT

This bill provides a credit under both the gross income tax (GIT) and the corporation business tax (CBT) for 25% of the cost paid by the taxpayer to rehabilitate an historic property owned and occupied by the taxpayer. No more than 40% of the rehabilitation costs for which the credit is allowed could be attributable to interior rehabilitation.

To qualify as an historic property, the property under rehabilitation would have to be:

(1) (a) Individually listed (or located in a district listed) on the National Register of Historic Places or the New Jersey Register of Historic Places, or designated (or located in a district designated) by the Pinelands Commission as an historic resource of significance to the Pinelands; and (b) if located within a district, certified by either the State Historic Preservation Officer or the Pinelands Commission (as appropriate) as contributing to the district's historic significance; or

(2) (a) Individually identified (or located in a district composed of properties identified) for protection as a significant resource in accordance with criteria established by the appropriate municipality and approved by the State Historic Preservation Officer; and (b) if located within a district, certified by the Officer as contributing to the district's historic significance.

The bill requires taxpayers wishing to claim the credit under either the GIT or the CBT to obtain certification from the State Historic Preservation Officer that the property is qualified as historic property and that the rehabilitation has been completed in compliance with applicable federal standards.

To qualify for the credit, a taxpayer must have owned and occupied the property for a year, without interruption, prior to the rehabilitation or following its completion (or both) as the taxpayer's principal place of business (or alternatively, in the case of a gross income taxpayer, the principal place of residence). The credit would be applicable in the taxable year in which the taxpayer makes final payment of the cost of rehabilitation; if the amount of the credit exceeded the taxpayer's tax liability for that year, the excess could be carried forward for the two following taxable years. Within any 10-year period, a GIT taxpayer could receive cumulative historic rehabilitation tax credits only up to $5,000; for a CBT taxpayer, the 10-year limit on the dollar amount of cumulative credits allowable would be $10,000.