Sponsored by:
Senator BOB SMITH
District 17 (Middlesex and Somerset)
Senator JOHN F. MCKEON
District 27 (Essex and Passaic)
Co-Sponsored by:
Senators Greenstein and Zwicker
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
As reported by the Senate Environment and Energy Committee on January 14, 2025, with amendments.
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 1[FederalAid] Federal Aid1 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.