STATE OF NEW JERSEY
216th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2014 SESSION
Sponsored by:
Assemblyman JOHN DIMAIO
District 23 (Hunterdon, Somerset and Warren)
Co-Sponsored by:
Assemblymen Caputo, DeAngelo, Rible, Giblin, A.M.Bucco and Assemblywoman Casagrande
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.