"Homeowners' Historic Property Reinvestment Act"; allows homeowners to claim credit against gross income tax for certain costs of rehabilitating historic properties.

S3545

SENATE, No. 3545

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 19, 2026

Sponsored by:

Senator� SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

SYNOPSIS

���� "Homeowners' Historic Property Reinvestment
Act"; allows homeowners to claim credit against gross income tax for
certain costs of rehabilitating historic properties.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
allowing homeowners to claim a credit against the gross
income tax for certain costs of rehabilitating historic properties,
supplementing Title 54A of the New Jersey Statutes.

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

���� 1.��� This act shall be known
and may be cited as the "Homeowners' Historic Property Reinvestment
Act."

���� 2.��� As used in this act:

���� "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.

���� "Director" means the
Director of the Division of Taxation in the Department of the Treasury.

���� "Officer" means the
State Historic Preservation Officer or the official within the State designated
by the Governor or by statute in accordance with the provisions of chapter 3023
of Title 54, United States Code (54 U.S.C. s.302301 et seq.), to act as liaison
for the purpose of administering historic preservation programs in the State.

���� "Principal
residence" means a one- or two-family homestead actually and continually
occupied by an individual as the individual�s permanent residence, as
distinguished from a vacation home, property owned and rented or offered for
rent by the individual, and other secondary real property holdings, except that
the permanent residence of military personnel called to active duty shall be
considered to be a principal residence so long as the individual maintains
ownership of the residence for which the credit is sought.

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

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

���� a. (1) individually listed, or
located in a district listed on the National Register of Historic Places in
accordance with the provisions of chapter 3021 of Title 54, United States Code
(54 U.S.C. s.302101 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
a 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

���� (2)�� if located within a
district, certified by either the officer or the Pinelands Commission, as
appropriate, as contributing to the historic significance of the district; or

���� b.��� (1)� 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 officer as suitable for substantially achieving the purpose of
preserving and rehabilitating buildings of historic significance within the
jurisdiction of the municipality, and

���� (2)� if located within a
district, certified by the 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 the 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.

���� 3.��� a.� An individual, upon
successful application to the officer, shall be allowed a credit against the
tax otherwise due pursuant to the "New Jersey Gross Income Tax Act,"
N.J.S.54A:1-1 et seq., in an amount equal to 25 percent of the cost of rehabilitation
paid by the individual for the rehabilitation of a qualified property that the
individual owns and occupies as the individual�s principal residence for a
period of twelve consecutive months following the completion of the
rehabilitation, provided that: (1) the cost of rehabilitation is in an amount
not less than 50 percent of the equalized assessed value of the structure for
local real estate tax purposes as indicated on the most recent property tax
bill for the qualified property prior to the start of the rehabilitation; and
(2) for the purpose of calculating the amount of the total credit, no more than
60 percent of the total cost of rehabilitation shall be attributable to
interior rehabilitation.

���� If more than one individual
owns a qualified property and at least one of the owners occupies the qualified
property as the owner�s principal residence for a period of twelve consecutive
months following the completion of the rehabilitation, each owner shall be
allowed a credit against the tax otherwise due pursuant to N.J.S.54A:1-1 et
seq. in an amount equal to 25 percent of the cost of rehabilitation paid by
each respective owner for the rehabilitation of the qualified property,
provided that: (1) the total cost of rehabilitation of the qualified property
borne by all owners is in an amount not less than 50 percent of the equalized
assessed value of the structure for local real estate tax purposes as indicated
on the most recent property tax bill for the qualified property prior to the
start of the rehabilitation; and (2) for the purpose of calculating the amount
of the total credit, no more than 60 percent of the total cost of
rehabilitation of the qualified property borne by all owners shall be attributable
to interior rehabilitation.

���� b.��� The amount of the credit
allowable under this section shall be applied against the tax otherwise due
pursuant to N.J.S.54A:1-1 et seq. for the taxable year in which the officer
issues the tax credit certification.� The director shall determine the order in
which the credit allowed under this section and any other credit permitted by
law shall be applied against the individual�s amount of tax due.� If the amount
of the credit exceeds the individual�s tax liability, that amount of excess
shall be considered an overpayment and shall be refunded to� the taxpayer in
the manner provided by subsection (a) of N.J.S. 54A:9-7.

���� c.���� The cumulative amount
of tax credits granted under this section for the cost of rehabilitation of a
specific qualified property shall not exceed $25,000 within any ten-year
period.

���� 4.��� a.� The officer shall,
in consultation with the director, promulgate rules and regulations in
accordance with the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.), as the officer deems necessary to administer the
provisions of this act, including but not limited to rules establishing
administrative fees to implement the provisions of this act and the setting of
an annual application submission date.

���� b.��� For every tax credit
allowed pursuant to section 3 of this act, the officer shall certify to the
director the total cost of rehabilitation; that the property meets the
definition of qualified property; that the rehabilitation has been completed in
substantial compliance with the requirements of the Secretary of the Interior's
Standards for Rehabilitation pursuant to section 67.7 of Title 36, Code of
Federal Regulations; and, if applicable, that no more than 60 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.� The individual shall
attach the certification to the tax return on which the individual claims the
credit.

���� c.���� The total amount of
credits approved by the officer pursuant to this act shall not exceed
$15,000,000.

���� 5.��� a. �The officer, in
collaboration with the director, shall adopt rules for the recapture of an
individual�s entire or partial tax credit amount allowed under this act.� The
rules shall require the officer to notify the director of the recapture of an
entire or partial tax credit amount. The recapture of funds shall be subject to
the State Uniform Tax Procedure Law, R.S.54:48-1 et seq., and recaptured funds
shall be deposited in the Property Tax Relief Fund of the State.

���� b.��� If, before the end of
five full years after the completion of the rehabilitation of the qualified
property, an individual who has been allowed a tax credit pursuant to section 3
of this act modifies the architectural components of the rehabilitated qualified
property so that it ceases to meet the requirements for the rehabilitation of a
qualified property as defined in this act, then the tax liability of the
individual for that taxable year shall be increased by the following percentage
of that portion of the original tax credit amount that the officer now
disallows:

���� (1)�� 100 percent of the
disallowed tax credit amount if the action causing the disallowance occurs
within the first full year after the rehabilitation�s completion;

���� (2)�� 80 percent of the
disallowed tax credit amount if the action causing the disallowance occurs
between the first and second full year after the rehabilitation�s completion;

���� (3)�� 60 percent of the
disallowed tax credit amount if the action causing the disallowance occurs
between the second and third full year after the rehabilitation�s completion;

���� (4)�� 40 percent of the
disallowed tax credit amount if the action causing the disallowance occurs
between the third and fourth full year after the rehabilitation�s completion;
and

���� (5)�� 20 percent of the
disallowed tax credit amount if the action causing the disallowance occurs
between the fourth and fifth full year after the rehabilitation�s completion.

���� c.���� Any tax credit award that
is recaptured pursuant to this section shall be reallocated in succeeding years
and shall not count against the cap set forth in subsection c. of section 4 of
this act.

���� 6.��� On or before December 31
of the fourth year following the effective date of this act, the officer, in
consultation with the director, shall prepare and submit a written report
regarding the number and total monetary amount of tax credits granted for the rehabilitation
of qualified properties pursuant to section 3 of this act, the geographical
distribution of the credits granted, an evaluation of the effectiveness of the
tax credits provided pursuant to this act in promoting the rehabilitation of
historic properties, recommendations for administrative or legislative changes
to increase the effectiveness of the program, and any other information that
the officer or the director may deem useful or appropriate.� This report shall
be submitted to the Governor and to the Legislature, pursuant to section 2 of
P.L.1991, c.164 (C.52:14-19.1).

���� 7.��� This act shall take
effect immediately and apply to taxable years beginning on or after January 1
next following the date of enactment.

STATEMENT

���� This bill establishes the
"Homeowners' Historic Property Reinvestment Act."� The bill allows
homeowners to claim a refundable credit against gross income tax in an amount
equal to 25 percent of the homeowner�s outlay for rehabilitating a historic
property in this State.� The credit is capped at $25,000 per property during a
ten-year period.� To qualify for the credit, a property that is to be
rehabilitated is required to meet certain criteria, as specified in the bill.

���� The bill requires a homeowner
seeking a tax credit under the bill to spend no more than 60 percent of the
cost of rehabilitation on interior rehabilitation and to own and occupy the
qualified property as the homeowner�s principal residence for twelve consecutive
months following the completion of the rehabilitation.� The bill requires
rehabilitation expenditures to be at least 50 percent of the equalized assessed
value of the structure for local real estate tax purposes as indicated on the
most recent property tax bill for the property prior to the start of the
rehabilitation.

���� The bill provides that the
cumulative amount of tax credits approved cannot exceed $15 million.

���� The bill requires the State
Historic Preservation Officer, in consultation with the Director of the
Division of Taxation, to prepare and submit a written report to the Governor
and the Legislature on or before December 31st of the fourth year following the
bill�s effective date.� The report would detail the number and total monetary
amount of tax credits granted for the rehabilitation of qualified properties,
the geographical distribution of the credits granted, an evaluation of the
effectiveness of the tax credits in promoting the rehabilitation of historic
properties, recommendations for administrative or legislative changes to
increase the effectiveness of the program, and any other information that the
officer or the director may deem useful or appropriate.