SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 3287

STATE OF NEW JERSEY

DATED:  JUNE 26, 2025

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 3287 (1R).

      As reported, this bill provides for a gross income tax deduction for amounts paid to taxpayers in exchange for their sale of certain real property interests for conservation purposes.  The New Jersey gross income tax provides a deduction for a charitable, qualified conservation contribution of real property interests for land preservation purposes modeled on the similar federal income tax deduction which covers full land interest sales and restricted land use easements.  But land interest sales in New Jersey to various conservation programs for which a purchase price is paid to the New Jersey taxpayer can result in taxable gains for those New Jersey sellers who need to garner some investment income from these sales.  To allow a deduction for these transfers with preservation or conservation restrictions on the real estate can prevent developers from buying up environmentally valuable land in this State and benefit both the taxpayer and the residents of the State at large.

      The bill will allow the deductions for both parts of some mixed transfers referred to as bargain sales in which there is both a charitable donation aspect and a cash purchase payment for less than the land’s fair market value (FMV).  The donation value is the difference between the FMV and the cash payment.  In a bargain sale, a real estate owner is both a seller (for the cash portion) and a donor (for the donated portion) of the real estate interest.  The bill will also allow a deduction for full market value sales to conservation organizations which include certain governmental programs and non-profit run preservation programs.  These programs will include but not be limited to those run by a governmental unit, charitable trust, foundation or charitable non-profit organization that participates in a 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.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates that this bill will result in annual State revenue losses of at least $300,000 to $500,000, due to the provision of a gross income tax deduction for gains realized from the sale of real property interests to qualified conservation organizations.  The magnitude of the estimated revenue loss is associated with real property sales under the Green Acres and Blue Acres programs, projected participation rates, and applicable tax rates.

      The OLS notes that the actual State revenue loss may be higher than the estimated range, given that the gross income tax deduction authorized under the bill would include the gains realized from certain other property sales.