NJ’s State Historic Tax Credit Program

Emily Manz
March 30, 2021

Preservation New Jersey has been at the forefront of advocating for a historic tax credit in New Jersey for over a decade. Our organization has testified to support legislation at the State House, organized letter writing campaigns, compiled a White Paper, and even published an Op-Ed in NJ Spotlight. We have worked to provide updates on legislation along the journey. We are proud to stand with partners like AIA-NJ and the many individuals and organizations who recognized the need for financial tools to support the rehabilitation of New Jersey’s historic resources.

With the passage of the Historic Property Reinvestment Act this year, we sprung into information mode. In February we hosted New Jersey Economic Development Authority (NJEDA) Chief of Staff Jorge Santos for a virtual discussion open to our membership and the preservation community on the program.  Here we learned some key components of the tax credit, as well as how the Preservation NJ community can provide feedback to the NJEDA.

Jorge shared that the NJEDA is currently accepting informal comments on the legislation via a page on the NJEDA website and there will be a more formal opportunity during a public comment period later this year. We encourage all Preservation New Jersey members and individuals and organizations concerned with preservation in New Jersey to provide feedback both through this portal and in the forthcoming formal comment period.

Preservation New Jersey is thrilled that New Jersey is now one of 39 states in the nation offering a state historic tax credit program and we know that this program will have a positive impact on preservation and on the state’s economy. We also recognize that there is more work to be done to make it an even more useful tool in the future and Preservation New Jersey will stay engaged in this process. We hope you will as well.

In this edition of Preservation Perspective, we have worked to compile information on the new program, and also provide information about the federal state tax credit programs, programs in our neighboring states, and local incentives.

We start here with an FAQ to provide some background on tax credits and what we know about this specific program thus far.

What is a tax credit? 

A tax credit is an amount of money that taxpayers can subtract directly from taxes owed to their government. Unlike deductions, which reduce the amount of taxable income, tax credits reduce the actual amount of tax owed.

What is a historic tax credit?

A historic tax credit provides credits against certain taxes for certain costs of rehabilitating historic properties. 

What is the New Jersey state historic tax credit?

The New Jersey state historic tax credit is a competitive tax credit program provided in the Historic Property Reinvestment Act. The Historic Property Reinvestment Act is part of the broader New Jersey Economic Recovery Act of 2020, a seven-year, $14 billion package of incentive programs intended to encourage New Jersey job growth, property development and redevelopment, community partnerships, and numerous other economic development initiatives. The Act was signed into law by Governor Phil Murphy on January 7, 2021. The tax credit program’s goal is to leverage the federal historic tax credit program to support transformative rehabilitation projects of qualified historic properties.     

What is a qualified historic property?

A ”qualified historic property” under the program is defined as a property located in the State of New Jersey that is an income producing property, and that is: (a) individually listed, or located in a district listed on the National Register of Historic Places or on the New Jersey Register of Historic Places or individually designated, or located in a district designated, by the Pinelands Commission as a historic resource of significance to the Pinelands; or (b) individually identified or registered, or located in a district composed of properties identified or registered, for protection as significant historic resources in accordance with criteria established by a municipality in which the property or district is located, and if located within a district, certified by the officer as contributing to the historic significance of the district.

What projects are eligible for a tax credit under the program?

A historic property rehabilitation project is eligible for a tax credit under the program if the business entity demonstrates to the New Jersey Economic Development Authority (EDA) at the time of application that: (a) without the tax credit, the rehabilitation project is not economically feasible; and (b) a project financing gap exists.

Business entities applying for the credit must be in good standing with the State.

The business entity must also commit to paying each worker employed to perform construction work at the project the prevailing wage rate for the worker’s craft or trade.

What is the size of the tax credit available?

Eligible projects can receive tax credits worth 40% of total costs up to a project cap of $4 million.

How can the tax credits be used?

These tax credits may be applied to: (a) the tax otherwise due; (b) the tax imposed on insurers; or (c) the tax imposed on marine insurance companies.

How many tax credits can be issued in total each year?

The total value of tax credits awarded annually during each of the first six years of the seven-year period covered under the program will not exceed $50 million.

Can the NJ State Tax Credit program be stacked with the federal tax credit program?

Yes. The Federal Historic Rehabilitation Tax Credit (HTC) Program is an indirect federal subsidy to finance the rehabilitation of historic buildings with a 20% tax credit for qualified expenditures. As with the New Jersey program, a building owner generates tax credits by completing a certified rehabilitation on a qualified rehabilitation building.

For more details on the program, the full text of the Historic Property Reinvestment Act is here and the NJEDA’s website for the program is here.

Emily Manz is Executive Director of Preservation New Jersey. She resides in Newark, New Jersey and enjoys improving her historic home and yard.