ASSEMBLY, No. 1075

 

STATE OF NEW JERSEY

 

Introduced Pending Technical Review by Legislative Counsel

 

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

 

 

By Assemblymen CORODEMUS and CONNORS

 

 

An Act providing a gross income tax credit for certain home purchases and for purchases and rehabilitation of certain homes in urban areas, 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 Act," N.J.S.54A:1-1 et seq., for taxable years commencing on or after January 1, 1992 and before January 1, 1994 if the eligible taxpayer:

    (1) between January 1, 1992 and June 30, 1993, purchases real estate in this State on which there is a new structure; or

    (2) between January 1, 1992 and June 30, 1993, enters into a contract for the purchase of real estate in this State and erection of a new structure thereon, provided that the purchase is completed on or before December 31, 1993; or

    (3) between January 1, 1992 and June 30, 1993, enters into a contract for the purchase of real estate in an Urban Target Area, as defined by the New Jersey Housing and Mortgage Finance Agency in accordance with the Internal Revenue Code of 1986 (26 U.S.C.§143[j]), on which real estate there is an existing structure, provided that between January 1, 1992 and December 31, 1993 there is expended by the taxpayer $10,000 or more to improve or rehabilitate that structure.

    b. The credit claimed by a taxpayer pursuant to subsection a. of this section shall be equal to that portion of the amount determined in paragraph (1) or (2) of this subsection that does not exceed $2,000.

    (1) For a credit claimed pursuant to paragraph (1) or (2) of subsection a. of this section, 7% of the purchase price of the real estate and structure;

    (2) For a credit claimed pursuant to paragraph (3) of subsection a. of this section, 7% of the sum of the purchase price of the real estate and structure and the taxpayer's expenditures to improve or rehabilitate the structure.

    c. The amount by which the credit exceeds the liability of a taxpayer otherwise due shall be considered an overpayment of tax and shall be refunded in the same manner as other refunds under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

    d. A claim for a credit pursuant to this section shall be submitted by a taxpayer on such forms and accompanied by such information or other materials as the Director of the Division of Taxation.

    e. As used in this section:

    "Eligible taxpayer" means a taxpayer who:

    (1) has New Jersey gross income not in excess of $65,000 in the taxable year in which the credit is claimed and determines tax pursuant to subsection b. of N.J.S.54A:2-1; or

    (2) has New Jersey gross income not in excess of $100,000 in the taxable year in which the credit is claimed and determines tax pursuant to subsection a. of N.J.S.54A:2-1.

    "Existing structure" means a structure which has previously been used for a residential purpose, and which is located on real estate which is purchased together with the structure for $200,000 or less.

    "New structure" means a structure built for a residential purpose but never occupied as a residence, which is purchased together with the real estate on which it is located for $200,000 or less.

    "Structure" means a building which contains one or more dwelling units, a portion of which may be used for non-residential purposes.

 

    2. a. An eligible taxpayer shall be allowed a credit against the tax otherwise due under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., for taxable years commencing on or after January 1, 1992 and before January 1, 1993 if the eligible taxpayer between July 1, 1992 and April 30, 1993 purchases real estate in this State on which there is an existing structure.

    b. The credit claimed by a taxpayer pursuant to subsection a. of this section shall be equal to that portion of 3.5% of the purchase price of the real estate and existing structure that does not exceed $1,000.

    c. The amount by which the credit exceeds the liability of a taxpayer otherwise due shall be considered an overpayment of tax and shall be refunded in the same manner as other refunds under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

    d. A claim for a credit pursuant to this section shall be submitted by a taxpayer on such forms and accompanied by such information or other materials as the Director of the Division of Taxation in the Department may require.

    e. As used in this section:

    "Eligible taxpayer" means a taxpayer whose purchase or contract for purchase for which credit is sought pursuant to subsection a. of this section is made with respect to a residential property that (1) is or will become his principal place of residence, or (2) is located in a resort municipality and is intended primarily for the seasonal or occasional use of the purchaser and the purchaser's family, or (3) is acquired in contemplation of its becoming the purchaser's principal place of residence upon the purchaser's retirement; and who:

    (1) has New Jersey gross income not in excess of $65,000 in the taxable year in which the credit is claimed and determines tax pursuant to subsection b. of N.J.S.54A:2-1; or

    (2) has New Jersey gross income not in excess of $80,000 in the taxable year in which the credit is claimed and determines tax pursuant to subsection a. of N.J.S.54A:2-1.

    "Existing structure" means a structure which has previously been used for a residential purpose, and which is located on real estate which is purchased together with the structure for not more than $165,000;

    "Resort municipality" means a resort municipality as defined in section 2 of P.L.1985, c.439 (C.40A:14-146.9).

    "Structure" means a building which contains one or more dwelling units, a portion of which may be used for non-residential purposes.

 

    3. The Director of the Division of Taxation in the Department of the Treasury shall promulgate such rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and require the use of such forms as the director deems necessary to effectuate the purposes of this act.

 

    4. This act shall take effect immediately except that section 2 shall not take effect until July 1, 1992 and only then only if there has not been enacted on or before that date a federal income tax credit for first-time home buyers any part of which is applicable during the 1992 federal tax year.

 

 

STATEMENT

 

    This bill establishes the New Jersey Home Buyers' Tax Credit program under the New Jersey gross income tax as a means of helping middle class families buy homes and stimulating employment growth in the building trades in the State.

    The qualified purchaser of new residential property who contracts for the purchase of real estate and the construction of a structure thereon between January 1, 1992 and June 30, 1993, or of previously unoccupied housing purchased during the same period, would be allowed a credit against New Jersey gross income tax liability of 7% of the sales price of the house, up to a maximum credit of $2,000. In addition, a similar credit would be allowed, based upon the combined purchase price and rehabilitation costs, to purchasers of residential structures in certain urban areas during 1992 and the first half of 1993, if $10,000 or more is spent by the taxpayer for improvements or rehabilitation of the structure during 1992 and 1993.

    Taxpayers eligible for such credits are those married joint filers and heads of households and surviving spouses whose gross incomes do not exceed $100,000 and those single filers and married persons filing separately whose gross incomes do not exceed $65,000. Eligible purchases must involve sales prices not exceeding $200,000.

    A qualified purchaser, during the period between July 1, 1992 and April 30, 1993, of existing and previously occupied housing, not being acquired for rehabilitation, would be allowed a credit against New Jersey gross income tax liability of 3.5% of the sales price of the house, up to a maximum credit of $1,000. This State tax credit for existing homes will take effect only if the federal government has not enacted a first-time home buyers federal income tax credit for 1992.

    Taxpayers eligible for these credits are those married joint filers whose gross incomes do not exceed $80,000 and those single filers and married persons filing separately whose gross incomes do not exceed $65,000. Eligible purchases must involve sales prices not exceeding $165,000.

    Any amount of the gross income tax credit that can not be used because of low tax liability in the year the credit is claimed is to be refunded in the same manner as are overpayments of gross income tax.

     The New Jersey Home Buyers' Tax Credit program is intended as an incentive to increase the number of new construction and rehabilitation starts in the State and encourage resales of existing housing stock. In addition to the creation of new construction jobs and the employment income derived from the increased employment that may be anticipated from stimulated home construction and resales, the market multiplier effect due to increased sales of durable goods and materials that accompany increased real estate construction and new and existing home sales is expected to provide economic pump-priming in this segment of the State's economy hit hard by the national recession.

 

 

 

Establishes New Jersey Home Buyers' Tax Credit under the gross income tax.