What's happening
This bill creates a state income tax credit for rehabilitating distressed residential properties, covering 30% of qualified expenses up to $100,000.
Why it matters
Targets older, vacant, and blighted housing. The credit is limited to residential properties built before 1962, located in officially designated distressed areas, and—if rental—must have been vacant for at least six months, focusing resources on the most neglected segments of the housing stock.
Encourages substantial investment and local oversight. To qualify, rehabilitation work must total at least $10,000, and completion must be certified by local government with a certificate of occupancy, ensuring meaningful improvements and accountability.
Promotes community renewal, not speculation. The tax credit is subject to a five-year recapture period; if the property is sold or ceases to be used as residential within five years, a portion of the credit must be repaid, discouraging quick flips and incentivizing longer-term community stability.
Prevents double-dipping and limits fiscal exposure. Expenditures used to claim this credit cannot be used for other state tax credits, and there are clear caps on the annual and total amounts claimable, helping to control costs and direct benefits to intended projects.
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Who cares
Owners rehabilitating distressed housing
The bill would offer personal income and corporate tax credits worth 30% of qualifying rehabilitation costs, capped at $100,000, for eligible properties built before 1962.
Landlords with vacant rental properties
Rental properties would qualify only if they had been vacant for at least six months while actively marketed for lease.
Local governments
Localities would identify eligible distressed areas through local law and certify completed rehabilitation work, occupancy approval and costs.
Property owners considering a sale or conversion
Selling a credited property or ending its residential use within five years would trigger repayment of a prorated share of the credit through increased taxes.
Headline styles
Tax Credit for Home Repairs
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Referred to budget and revenue
- Referred to budget and revenue
Full text
4 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4906
2019-2020 Regular Sessions
IN SENATE
March 29, 2019
Introduced by Sens. RANZENHOFER, FUNKE, SERINO -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue
AN ACT to amend the tax law, in relation to establishing a credit against income tax for the rehabilitation of distressed residential properties
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 606 of the tax law is amended by adding a new subsection (jjj) to read as follows:
(jjj) Credit for rehabilitation of distressed residential properties. (1) For taxable years beginning on or after January first, two thousand nineteen, a taxpayer shall be allowed a credit as hereinafter provided, against the tax imposed by this article, in an amount equal to thirty percent of the qualified rehabilitation expenditures made by the taxpayer with respect to a qualified distressed residential property. Provided, however, the credit shall not exceed one hundred thousand dollars.
(2) Tax credits allowed pursuant to this subsection shall be allowed in the taxable year in which the property is deemed a certified rehabilitation.
(3) If the amount of the credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess may be carried over to the following year or years, and may be applied against the taxpayer's tax for such year or years.
(4) (A) The term "qualified rehabilitation expenditure" means, for purposes of this subsection, any amount properly chargeable to a capital account:
(i) in connection with the certified rehabilitation of a qualified distressed residential property, and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10856-01-9
S. 4906 2
(ii) for property for which depreciation would be allowable under section 168 of the internal revenue code.
(B) Such term shall not include (i) the cost of acquiring any building or interest therein, (ii) any expenditure attributable to the enlargement of an existing building, or (iii) any expenditure made prior to January first, two thousand nineteen or after December thirty-first, two thousand twenty-four.
(5) The term "certified rehabilitation" means, for purposes of distressed residential property in this subsection, any rehabilitation of a certified distressed residential property which has been approved and certified by a local government as being completed, with a certificate of occupancy issued, and that the costs are consistent with the work completed. Such certification shall be acceptable as proof that the expenditures related to such rehabilitation qualify as qualified rehabilitation expenditures for purposes of the credit allowed under paragraph one of this subsection.
(6) (A) The term "qualified residential property" means, for purposes of this subsection, a distressed residential property located within New York state:
(i) which has been substantially rehabilitated,
(ii) which was constructed prior to January first, nineteen hundred sixty-two,
(iii) which is owned by the taxpayer, and
(iv) which is located within a distressed residential or mixed-use area, as identified by each locality through local law, that is deemed an area in need of community renewal due to dilapidation and vacancies.
(B) If the distressed residential property is rental property, such property shall have been vacant for at least six months while actively marketed for lease.
(C) A building shall be treated as having been "substantially rehabilitated" if the qualified rehabilitation expenditures in relation to such building total ten thousand dollars or more.
(7) (A) If the taxpayer disposes of such taxpayer's interest in the qualified distressed residential property, or such property ceases to be used as a residential property of the taxpayer within five years of receiving the credit under this subsection, the taxpayer's tax imposed by this article for the taxable year in which such disposition or cessation occurs shall be increased by the recapture portion of the credit allowed under this subsection for all prior taxable years with respect to such rehabilitation.
(B) For purposes of subparagraph (A) of this paragraph, the recapture portion shall be the product of the amount of credit claimed by the taxpayer multiplied by a ratio, the numerator of which is equal to sixty less the number of months the building is owned or used as residential property by the taxpayer and the denominator of which is sixty.
(8) Any expenditure for which a credit is claimed under this subsection shall not be eligible for any other credit under this chapter.
§ 2. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xliv) to read as follows:
(xliv) Credit for rehabilitation Amount of credit of distressed residential under subdivision fifty-three properties under subsection (jjj) of section two hundred ten-B
S. 4906 3
§ 3. Section 210-B of the tax law is amended by adding a new subdivision 53 to read as follows:
53. Credit for rehabilitation of distressed residential properties. (1) For taxable years beginning on or after January first, two thousand nineteen, a taxpayer shall be allowed a credit as hereinafter provided, against the tax imposed by this article, in an amount equal to thirty percent of the qualified rehabilitation expenditures made by the taxpayer with respect to a qualified distressed residential property. Provided, however, the credit shall not exceed one hundred thousand dollars.
(2) Tax credits allowed pursuant to this subdivision shall be allowed in the taxable year in which the property is deemed a certified rehabilitation.
(3) If the amount of the credit allowable under this subdivision for any taxable year shall exceed the taxpayer's tax for such year, the excess may be carried over to the following year or years, and may be applied against the taxpayer's tax for such year or years, but shall not exceed twenty-five thousand dollars.
(4) (A) The term "qualified rehabilitation expenditure" means, for purposes of this subdivision, any amount properly chargeable to a capital account:
(i) in connection with the certified rehabilitation of a qualified residential property, and
(ii) for property for which depreciation would be allowable under section 168 of the internal revenue code.
(B) Such term shall not include (i) the cost of acquiring any building or interest therein, (ii) any expenditure attributable to the enlargement of an existing building, or (iii) any expenditure made prior to January first, two thousand nineteen or after December thirty-first, two thousand twenty-four.
(5) The term "certified rehabilitation" means, for purposes of this subdivision, any rehabilitation of a certified distressed residential property which has been approved and certified by a local government as being completed, with a certificate of occupancy issued, and that the costs are consistent with the work completed. Such certification shall be acceptable as proof that the expenditures related to such rehabilitation qualify as qualified rehabilitation expenditures for purposes of the credit allowed under paragraph one of this subdivision.
(6) (A) The term "qualified residential property" means, for purposes of this subdivision, a distressed residential property located within New York state:
(i) which has been substantially rehabilitated,
(ii) which was constructed prior to January first, nineteen hundred sixty-two,
(iii) which is owned by the taxpayer, and
(iv) which is located within a distressed residential or mixed-use area, as identified by each locality through local law, that is deemed an area in need of community renewal due to dilapidation and vacancies.
(B) If the distressed residential property is rental property, such property shall have been vacant for at least six months while actively marketed for lease.
(C) A building shall be treated as having been "substantially rehabilitated" if the qualified rehabilitation expenditures in relation to such building total ten thousand dollars or more.
(7) (A) If the taxpayer disposes of such taxpayer's interest in the qualified distressed residential property, or such property ceases to be
S. 4906 4
used as a residential property of the taxpayer within five years of receiving the credit under this subdivision, the taxpayer's tax imposed by this article for the taxable year in which such disposition or cessation occurs shall be increased by the recapture portion of the credit allowed under this subdivision for all prior taxable years with respect to such rehabilitation.
(B) For purposes of subparagraph (A) of this paragraph, the recapture portion shall be the product of the amount of credit claimed by the taxpayer multiplied by a ratio, the numerator of which is equal to sixty less the number of months the building is owned or used as residential property by the taxpayer and the denominator of which is sixty.
(8) Any expenditure for which a credit is claimed under this subdivision shall not be eligible for any other credit under this chapter.
§ 4. This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2019.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to establish- ing a credit against income tax for the rehabilitation of distressed residential properties
SUMMARY OF PROVISIONS::
This bill would create a new tax credit program to encourage the reha- bilitation of distressed residential property.
Read the full memo (668 words)
Section 1 - amends section 606 of the Tax Law by adding a new subsection (ccc) which creates a tax credit for the rehabilitation of distressed residential property.
(1) For taxable years beginning after January 1, 2019, taxpayers shall be allowed a credit equal to thirty percent of the qualified expendi- tures made by the taxpayer with respect to a qualified distressed resi- dential property.
(2) The credit shall not exceed $100,000. Credits are allowed in the taxable year in which the property is deemed a certified rehabilitation.
(3) Credits may be carried forward.
(4) Defines qualified rehabilitation expenditure. Expenditures must be made after January 1, 2019 and before December 31, 2024.
(5) Defines certified rehabilitation.
(6) Defines qualified distressed residential property.
(7) Provides for recapture of tax credits in the event the rehabilitated distressed residential property is disposed of within five years after receiving the credit.
(8) Credit claimed under this subsection shall not be eligible for any other credit.
Section 2 - amends subparagraph (B) of paragraph 1 of subsection (i) of section 606 by adding a new clause (xliii) enumerating the new credit for rehabilitation of distressed residential property.
Section 3 - amends section 210-B of the Tax law to add a new subdivision 53.
(1) For taxable years beginning after January 1, 2019, taxpayers shall be allowed a credit equal to thirty percent of the qualified expendi- tures made by the taxpayer with respect to a qualified distressed resi- dential property.
(2) The credit shall not exceed $100,000. Credits are allowed in the taxable year in which the property is deemed a certified rehabilitation.
(3) Credits may be carried forward, but not more than $25,000 in any year.
(4) Defines qualified rehabilitation expenditure. Expenditures must be made after January 1, 2019 and before December 31, 2024.
(5) Defines certified rehabilitation.
(6) Defines qualified distressed commercial property.
(7) Provides for recapture of tax credits in the event the rehabilitated distressed residential property is disposed of within five years after receiving the credit.
(8) Credit claimed under this subsection shall not be eligible for any other credit.
Section 4 - provides that this act shall take effect immediately and shall apply to taxable years on or after January 1, 2019.
Purpose and justification
In many communities across New York State, whether towns, villages, suburbs or cities, there are areas of rundown and dilapidated residen- tial buildings. These residential buildings may have not have received any significant updating for years, and they are now vacant or underper- forming properties that give their whole neighborhoods a rundown appear- ance and at best are not attractive places to live. Rehabilitating these properties will benefit communities, make these areas economically attractive for new and existing residents and help to revive the economy of our state. Under this legislation, it will be up to local communities to identify, by local law, areas that are dilapidated and in need of rehabilitation, and to confirm that rehabilitation work is completed to the satisfaction of their building departments and certificates of occu- pancy were issued for the work done. Residents and communities, as well as the state as a whole, will be rewarded with rejuvenated neighbor- hoods.
Existing law
Various tax credits are offered to encourage activities that will bene- fit the state.
Prior legislative history
2012 - S.6979/A.9993 - INVESTIGATIONS/ Ways & Means 2013-14 - S.2739-B/A.4163-B - PASSED SENATE/Ways & Means 2015-16 - S.1293/A.4398 - PASSED SENATE/Ways & Means 2017 - S.2642-A/A.4415-A - PASSED SENATE/Ways & Means 2018 - S.2642-B/A.4415-B - FINANCE/Ways & Means
Fiscal implications
To be determined.
Effective date
This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2019.
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