S2191

SENATE, No. 2191

STATE OF NEW JERSEY

INTRODUCED JUNE 12, 1997

By Senators LaROSSA, KYRILLOS and Singer

An Act providing a credit against the gross income tax and the corporation business tax for certain costs of rehabilitating historic properties, 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 that is:

(1) located in a municipality;

(2) 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;

(3) (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.), and

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

"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. "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.

"Municipality" means a municipality ranked within the first 100 municipalities on the Municipal Distress Index which is complete and in effect at the time the actual physical components of the rehabilitation are commenced

"Municipal Distress Index" means the ranking of municipalities compiled by the State according to certain variables, which variables were designated in 1979 by the Governor's Committee of Mayors, to measure diverse aspects of social, economic, physical and fiscal conditions in each locality.

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, 35 C.F.R. §67.7 (1995). The taxpayer shall attach the certification to the gross income 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, in consultation with the Commissioner of the Department of Environmental Protection, promulgate 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 that is:

(1) located in a municipality;

(2) 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 venture;

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

(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 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, 1997, and section 3 shall apply to fiscal or calendar accounting years beginning on or after January 1, 1997.

STATEMENT

This bill provides a credit under the gross income tax and the corporation business tax equal to 25 percent of the cost of rehabilitating an historic property owned by the taxpayer and used for residential or commercial purposes. The historic property must be located in a municipality ranked between 1 through 100 on the latest available Municipal Distress Index compiled by the State.

The purpose of this bill is to encourage property owners to undertake the rehabilitation of historic properties in "distressed" municipalities. The bill will promote, generally, historic preservation in the State and, specifically, neighborhood preservation in such areas.

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