STATE OF NEW YORK ________________________________________________________________________ 2643--B 2017-2018 Regular Sessions IN SENATE January 13, 2017 ___________ Introduced by Sens. RANZENHOFER, FELDER, FUNKE, LARKIN, RITCHIE, SERINO -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations -- reported favorably from said committee and committed to the Committee on Finance -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading -- recom- mitted to the Committee on Investigations and Government Operations in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said commit- tee AN ACT to amend the tax law, in relation to establishing a credit against income tax for the rehabilitation of distressed commercial properties The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 606 of the tax law is amended by adding a new 2 subsection (ccc) to read as follows: 3 (ccc) Credit for rehabilitation of distressed commercial properties. 4 (1) For taxable years beginning on or after January first, two thousand 5 eighteen, a taxpayer shall be allowed a credit as hereinafter provided, 6 against the tax imposed by this article, in an amount equal to thirty 7 percent of the qualified rehabilitation expenditures made by the taxpay- 8 er with respect to a qualified distressed commercial property. Provided, 9 however, the credit shall not exceed one hundred thousand dollars. 10 (2) Tax credits allowed pursuant to this subsection shall be allowed 11 in the taxable year in which the property is deemed a certified rehabil- 12 itation. 13 (3) If the amount of the credit allowable under this subsection for 14 any taxable year shall exceed the taxpayer's tax for such year, the EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06136-04-8S. 2643--B 2 1 excess may be carried over to the following year or years, and may be 2 applied against the taxpayer's tax for such year or years. 3 (4) (A) The term "qualified rehabilitation expenditure" means, for 4 purposes of this subsection, any amount properly chargeable to a capital 5 account: 6 (i) in connection with the certified rehabilitation of a qualified 7 distressed commercial property, and 8 (ii) for property for which depreciation would be allowable under 9 section 168 of the internal revenue code. 10 (B) Such term shall not include (i) the cost of acquiring any building 11 or interest therein, (ii) any expenditure attributable to the enlarge- 12 ment of an existing building, or (iii) any expenditure made prior to 13 January first, two thousand eighteen or after December thirty-first, two 14 thousand twenty-three. 15 (5) The term "certified rehabilitation" means, for purposes of this 16 subsection, any rehabilitation of a certified distressed commercial 17 property which has been approved and certified by a local government as 18 being completed, with a certificate of occupancy issued, and that the 19 costs are consistent with the work completed. Such certification shall 20 be acceptable as proof that the expenditures related to such rehabili- 21 tation qualify as qualified rehabilitation expenditures for purposes of 22 the credit allowed under paragraph one of this subsection. 23 (6) (A) The term "qualified distressed commercial property" means, for 24 purposes of this subsection, a distressed commercial property located 25 within New York state: 26 (i) which has been substantially rehabilitated, 27 (ii) which is owned by the taxpayer, and 28 (iii) which is located within a distressed commercial area, as identi- 29 fied by each locality through local law, that is deemed an area in need 30 of community renewal due to dilapidation and vacancies. 31 (B) If the distressed commercial property is rental property, such 32 property shall have been more than thirty percent vacant for twelve 33 months while actively marketed for lease. 34 (C) A building shall be treated as having been "substantially rehabil- 35 itated" if the qualified rehabilitation expenditures in relation to such 36 building total ten thousand dollars or more. 37 (7) (A) If the taxpayer disposes of such taxpayer's interest in the 38 qualified distressed commercial property, or such property ceases to be 39 used as a commercial property of the taxpayer within five years of 40 receiving the credit under this subsection, the taxpayer's tax imposed 41 by this article for the taxable year in which such disposition or cessa- 42 tion occurs shall be increased by the recapture portion of the credit 43 allowed under this subsection for all prior taxable years with respect 44 to such rehabilitation. 45 (B) For purposes of subparagraph (A) of this paragraph, the recapture 46 portion shall be the product of the amount of credit claimed by the 47 taxpayer multiplied by a ratio, the numerator of which is equal to sixty 48 less the number of months the building is owned or used as commercial 49 property by the taxpayer and the denominator of which is sixty. 50 (8) Any expenditure for which a credit is claimed under this 51 subsection shall not be eligible for any other credit under this chap- 52 ter. 53 § 2. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 54 of the tax law is amended by adding a new clause (xliv) to read as 55 follows:S. 2643--B 3 1 (xliv) Credit for rehabilitation Amount of credit under 2 of distressed commercial properties subdivision fifty-three 3 under subsection (ccc) of section two hundred ten-B 4 § 3. Section 210-B of the tax law is amended by adding a new subdivi- 5 sion 53 to read as follows: 6 53. Credit for rehabilitation of distressed commercial properties. (1) 7 For taxable years beginning on or after January first, two thousand 8 eighteen, a taxpayer shall be allowed a credit as hereinafter provided, 9 against the tax imposed by this article, in an amount equal to thirty 10 percent of the qualified rehabilitation expenditures made by the taxpay- 11 er with respect to a qualified distressed commercial property. Provided, 12 however, the credit shall not exceed one hundred thousand dollars. 13 (2) Tax credits allowed pursuant to this subdivision shall be allowed 14 in the taxable year in which the property is deemed a certified rehabil- 15 itation. 16 (3) If the amount of the credit allowable under this subdivision for 17 any taxable year shall exceed the taxpayer's tax for such year, the 18 excess may be carried over to the following year or years, and may be 19 applied against the taxpayer's tax for such year or years, but shall not 20 exceed twenty-five thousand dollars. 21 (4) (A) The term "qualified rehabilitation expenditure" means, for 22 purposes of this subdivision, any amount properly chargeable to a capi- 23 tal account: 24 (i) in connection with the certified rehabilitation of a qualified 25 commercial property, and 26 (ii) for property for which depreciation would be allowable under 27 section 168 of the internal revenue code. 28 (B) Such term shall not include (i) the cost of acquiring any building 29 or interest therein, (ii) any expenditure attributable to the enlarge- 30 ment of an existing building, or (iii) any expenditure made prior to 31 January first, two thousand eighteen or after December thirty-first, two 32 thousand twenty-three. 33 (5) The term "certified rehabilitation" means, for purposes of this 34 subdivision, any rehabilitation of a certified distressed commercial 35 property which has been approved and certified by a local government as 36 being completed, with a certificate of occupancy issued, and that the 37 costs are consistent with the work completed. Such certification shall 38 be acceptable as proof that the expenditures related to such rehabili- 39 tation qualify as qualified rehabilitation expenditures for purposes of 40 the credit allowed under paragraph one of this subdivision. 41 (6) (A) The term "qualified distressed commercial property" means, for 42 purposes of this subdivision, a distressed commercial property located 43 within New York state: 44 (i) which has been substantially rehabilitated, 45 (ii) which is owned by the taxpayer, and 46 (iii) which is located within a distressed commercial area, as identi- 47 fied by each locality through local law, that is deemed an area in need 48 of community renewal due to dilapidation and vacancies. 49 (B) If the distressed commercial property is rental property, such 50 property shall have been more than thirty percent vacant for twelve 51 months while actively marketed for lease. 52 (C) A building shall be treated as having been "substantially rehabil- 53 itated" if the qualified rehabilitation expenditures in relation to such 54 building total ten thousand dollars or more. 55 (7) (A) If the taxpayer disposes of such taxpayer's interest in the 56 qualified distressed commercial property, or such property ceases to beS. 2643--B 4 1 used as a commercial property of the taxpayer within five years of 2 receiving the credit under this subdivision, the taxpayer's tax imposed 3 by this article for the taxable year in which such disposition or cessa- 4 tion occurs shall be increased by the recapture portion of the credit 5 allowed under this subdivision for all prior taxable years with respect 6 to such rehabilitation. 7 (B) For purposes of subparagraph (A) of this paragraph, the recapture 8 portion shall be the product of the amount of credit claimed by the 9 taxpayer multiplied by a ratio, the numerator of which is equal to sixty 10 less the number of months the building is owned or used as commercial 11 property by the taxpayer and the denominator of which is sixty. 12 (8) Any expenditure for which a credit is claimed under this subdivi- 13 sion shall not be eligible for any other credit under this chapter. 14 § 4. This act shall take effect immediately and shall apply to taxable 15 years beginning on or after January 1, 2018.