NY State Senate Bill 2021-S5143

Senate Bill S5143

2021-2022 Legislative Session

Establishes a credit against income tax for the rehabilitation of distressed residential properties

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Archive: Last Bill Status - In Senate Committee Budget And Revenue Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to budget and revenue
Feb 25, 2021	referred to budget and revenue

2021-S5143 (ACTIVE) - Details

Current Committee:: Senate Budget And Revenue
Law Section:: Tax Law
Laws Affected:: Amd §§606 & 210-B, Tax L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S6979
2013-2014: S2739
2015-2016: S1293
2017-2018: S2642
2019-2020: S4906

2021-S5143 (ACTIVE) - Summary

Establishes a credit against income tax for the rehabilitation of distressed residential properties; allows a credit equal to thirty percent of the qualified rehabilitation expenditures made by the taxpayer with respect to a qualified distressed residential property; requires property that qualifies must be constructed prior to January 1, 1962 in a distressed residential or mixed-use neighborhood.

2021-S5143 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5143

SPONSOR: RATH
 
TITLE OF BILL:

An act to amend the tax law, in relation to establishing 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.

Section 1 - amends section 606 of the Tax Law by adding a new subsection
(cod) which creates a tax credit for the rehabilitation of distressed
residential property.

(1) For taxable years beginning after January 1, 2021, 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, 2021 and before December 31, 2026.

(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, 2021, 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, 2021 and before December 31, 2026.

(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, 2021.

 
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
2019-20 - S.4906 - BUDGET & REVENUE

 
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, 2021.

2021-S5143 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5143
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             February 25, 2021
                                ___________
 
 Introduced  by  Sen.  RATH  --  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  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.    Section  606  of the tax law is amended by adding a new
 subsection (kkk) to read as follows:
   (KKK) CREDIT FOR REHABILITATION OF DISTRESSED RESIDENTIAL  PROPERTIES.
 (1)  FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND
 TWENTY-ONE,  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 REHABIL-
 ITATION.
   (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
   (II) FOR PROPERTY FOR WHICH  DEPRECIATION  WOULD  BE  ALLOWABLE  UNDER
 SECTION 168 OF THE INTERNAL REVENUE CODE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD10019-01-1

 S. 5143                             2
 
   (B) SUCH TERM SHALL NOT INCLUDE (I) THE COST OF ACQUIRING ANY BUILDING
 OR  INTEREST  THEREIN, (II) ANY EXPENDITURE ATTRIBUTABLE TO THE ENLARGE-
 MENT OF AN EXISTING BUILDING, OR (III) ANY  EXPENDITURE  MADE  PRIOR  TO
 JANUARY  FIRST,  TWO THOUSAND TWENTY-ONE OR AFTER DECEMBER THIRTY-FIRST,
 TWO THOUSAND TWENTY-SIX.
   (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  CERTIF-
 ICATE  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  REHA-
 BILITATION  EXPENDITURES  FOR PURPOSES OF THE CREDIT ALLOWED UNDER PARA-
 GRAPH 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 REHABIL-
 ITATED" 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 CESSA-
 TION  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 CHAP-
 TER.
   § 2. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
 of  the  tax  law  is  amended  by adding a new clause (xlvi) to read as
 follows:
 
 (XLVI) CREDIT FOR REHABILITATION     AMOUNT OF CREDIT
 OF DISTRESSED RESIDENTIAL            UNDER SUBDIVISION FIFTY-FIVE
 PROPERTIES UNDER SUBSECTION (KKK)    OF SECTION TWO HUNDRED TEN-B
 
   § 3. Section 210-B of the tax law is amended by adding a new  subdivi-
 sion 55 to read as follows:

 S. 5143                             3
 
   55.  CREDIT  FOR  REHABILITATION OF DISTRESSED RESIDENTIAL PROPERTIES.
 (1) FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND
 TWENTY-ONE,  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 REHABIL-
 ITATION.
   (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 CAPI-
 TAL 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  ENLARGE-
 MENT  OF  AN  EXISTING  BUILDING, OR (III) ANY EXPENDITURE MADE PRIOR TO
 JANUARY FIRST, TWO THOUSAND TWENTY-ONE OR AFTER  DECEMBER  THIRTY-FIRST,
 TWO THOUSAND TWENTY-SIX.
   (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  REHABILI-
 TATION  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 REHABIL-
 ITATED" 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 SUBDIVISION, THE TAXPAYER'S TAX IMPOSED

 S. 5143                             4
 
 BY THIS ARTICLE FOR THE TAXABLE YEAR IN WHICH SUCH DISPOSITION OR CESSA-
 TION 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  SUBDIVI-
 SION 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, 2021.

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