Excludes gains on sales of certain real estate purchases from taxation under corporation business tax and gross income tax.

A1177

ASSEMBLY, No. 1177

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman JOHN DIMAIO

District 23 (Hunterdon, Somerset and Warren)

Co-Sponsored by:

Assemblyman DeAngelo

SYNOPSIS

���� Excludes gains on sales of certain real estate
purchases from taxation under corporation business tax and gross income tax.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

excluding gains on sales of certain real estate
purchases from taxation under the corporation business tax and the gross income
tax, supplementing P.L.1945, c.162 and Title 54A of the New Jersey Statutes.

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

���� 1.��� a.� Entire net income
shall not include gains realized on the sale or exchange of eligible real
estate purchased by the taxpayer during the three year period beginning on the
date of enactment of P.L.��� , c.�� (C.���� )(pending before the Legislature as
this bill) and ending on the same day of the same month three calendar years
later if at the time of sale that real property has been held by the taxpayer
for more than two years.

���� b.��� For purposes of
determining a taxpayer�s eligible real estate holding period, the rules of
section 1222 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1222)
shall apply.

���� c.���� As used in this
section:

���� �Eligible real estate� means
real estate that is not occupied by the taxpayer.� �Eligible real estate� does
not include vacant land but does include land in an approved subdivision
actively on the market for sale or being held for sale.

���� �Vacant land� means land in
its unimproved state and idle land not actively used for agriculture or other
purposes.

���� 2.��� a.� Gross income shall
not include gains realized on the sale or exchange of eligible real estate
purchased by the taxpayer during the three year period beginning on the date of
enactment of P.L. , c. (C. )(pending
before the Legislature as this bill) and ending on the same day of the same
month three calendar years later if at the time of sale that real property has
been held by the taxpayer for more than two years.

���� b.��� For purposes of
determining of determining a taxpayer�s eligible real estate holding period,
the rules of section 1222 of the federal Internal Revenue Code of 1986 (26
U.S.C. s.1222) shall apply.

���� c.���� For the purposes of
this section, in the case of a taxpayer�s holding property transferred to the
taxpayer in a transaction described in subsection (a) of section 1041 of the
federal Internal Revenue Code of 1986 (26 U.S.C. s.1041), the taxpayer shall be
deemed to have purchased the property on the date the transferor purchased the
property and the period the taxpayer holds the property shall include the
period the transferor held the property.

���� d.��� For the purposes of this
section, in the case of a taxpayer acquiring property from a decedent or to
whom property passed from a decedent within the meaning of subsection (b) of
section 1014 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1014),
if� the basis of that property in the hands of the taxpayer is determined
pursuant to section 1014 of the federal Internal Revenue Code of 1986 (26
U.S.C. s.1014) then the taxpayer shall be deemed to have purchased the property
on the date the decedent purchased the property and the period the individual
holds the property shall include the period the decedent held the property.

���� e.���� As used in this
section:

���� �Eligible real estate� means
real estate that is not occupied by the taxpayer.� �Eligible real estate� does
not include vacant land but does include land in an approved subdivision
actively on the market for sale or being held for sale.

���� �Vacant land� means land in
its unimproved state and idle land not actively used for agriculture or other
purposes.

���� 3.��� This act shall take
effect immediately.

STATEMENT

���� This bill excludes the gains
on sales of certain real estate purchases from taxation under the corporation
business tax and gross income tax to stimulate real estate sales.

���� The exclusions apply to gains
on the sales of certain land purchased by the taxpayer during the three year
period beginning on the date of enactment of this bill and ending on that same
calendar date three years later.� The exclusions apply to investment property
that is not occupied by the taxpayer.� Vacant land, land in its unimproved
state and idle land not actively used for agriculture or other purposes, are
not eligible for the exclusion.� If this investment property is held for more
than two years before it is sold, then any gain on the sale is excluded from
the income subject to the corporation business tax or the gross income tax.