Provides gross income tax deduction for amounts paid to taxpayers for sale of certain real property interests for conservation purposes.

A173

ASSEMBLY, No. 173

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman DAWN FANTASIA

District 24 (Morris, Sussex and Warren)

Assemblyman MICHAEL INGANAMORT

District 24 (Morris, Sussex and Warren)

Assemblyman JAMES J. KENNEDY

District 22 (Somerset and Union)

Co-Sponsored by:

Assemblymen Sauickie, McClellan, Myhre, DePhillips,
Peterson, Kanitra, Assemblywomen Donlon, Peterpaul, Collazos-Gill and Bagolie

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

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

��

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.