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General Assembly Raised Bill No. 7114
January Session, 2025
LCO No. 5508
Referred to Committee on HOUSING
Introduced by:
(HSG)
AN ACT ESTABLISHING A TAX CREDIT FOR THE CONSTRUCTION
OF RESIDENTIAL UNITS ABOVE RETAIL PROPERTY.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective July 1, 2025, and applicable to taxable years 1
commencing on and after January 1, 2026) (a) As used in this section: 2
(1) "Dwelling unit" has the same meaning as provided in section 47a-3
1 of the general statutes; 4
(2) "Nonprofit corporation" means a nonprofit corporation 5
incorporated pursuant to chapter 602 of the general statutes, or any 6
predecessor statutes thereto, and having as one of its purposes the 7
construction, conversion, ownership or operation of housing; 8
(3) "Owner" means (A) any taxpayer filing a state of Connecticut tax 9
return who possesses title to a retail property or prospective title in the 10
form of a purchase agreement or option to purchase a retail property to 11
construct residential dwelling units above such retail property; and (B) 12
a nonprofit corporation that possesses such title or prospective title; 13
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(4) "Qualified construction expenditures" means any costs incurred 14
for the physical construction involved in the development of residential 15
dwelling units above existing retail property; and 16
(5) "Retail property" means commercial real estate that is used to sell 17
consumer goods and services. 18
(b) Not later than January 1, 2026, the Commissioner of Housing shall 19
establish a program to administer a system of tax credit vouchers within 20
the resources, requirements and purposes of this section for owners 21
constructing residential dwelling units above existing retail property or 22
taxpayers making contributions that are qualified construction 23
expenditures. Any owner eligible to apply for a tax credit voucher 24
pursuant to this section shall be eligible for such voucher in an amount 25
equal to ten per cent of the qualified construction expenditures for each 26
additional floor above the retail property for a maximum of three 27
additional floors against the tax imposed under chapter 208 of the 28
general statutes. 29
(c) Not later than January 1, 2026, the commissioner shall develop 30
standards for the approval of tax credit vouchers for the construction of 31
residential dwelling units above retail property for which a tax credit 32
voucher is sought. 33
(d) Prior to beginning any construction work on a retail property for 34
which an owner will seek a tax credit voucher under this section, such 35
owner shall submit a construction plan to the commissioner for a 36
determination of whether such construction plan meets the standards 37
developed under the provisions of subsections (c) and (k) of this section 38
and shall also submit to the commissioner an estimate of the qualified 39
construction expenditures and any other information prescribed by the 40
commissioner. Not later than sixty days after receipt of such plan, 41
estimate of qualified construction expenditures and other such 42
information prescribed by the commissioner, the commissioner shall 43
determine whether such plan conforms to the standards developed 44
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under the provisions of subsections (c) and (k) of this section. 45
(e) If the commissioner certifies that a construction plan conforms to 46
the standards developed under the provisions of subsections (c) and (k) 47
of this section, the commissioner shall reserve for the benefit of the 48
owner an allocation for a credit against the tax imposed under chapter 49
208 of the general statutes equivalent to ten per cent of the projected 50
qualified construction expenditures. 51
(f) Following the completion of the construction of residential 52
dwelling units above existing retail property, the owner shall notify the 53
commissioner that such construction has been completed. The owner 54
shall provide the commissioner with documentation of work performed 55
to construct residential dwelling units above the existing retail property 56
and shall certify the cost incurred in constructing such residential units 57
above existing retail property. The commissioner shall review such 58
work and verify its compliance with the plan. Following such 59
verification, the commissioner shall issue a tax credit voucher to either 60
the owner of the existing retail property or the taxpayer named by the 61
owner as contributing to the construction. The tax credit voucher shall 62
be in an amount equivalent to the lesser of (1) the tax credit reserved 63
upon certification of the plan under the provisions of subsection (e) of 64
this section, or (2) ten per cent of the actual qualified construction 65
expenditures. In order to obtain a credit against any tax due under 66
chapter 208 of the general statutes, the holder of the tax credit voucher 67
shall file the voucher with the holder's state tax return. 68
(g) An owner who constructs residential dwelling units above 69
existing retail property shall not be eligible for a tax credit voucher 70
under subsections (f) and (h) of this section, unless the owner incurs 71
qualified construction expenditures exceeding fifteen thousand dollars. 72
(h) (1) The Commissioner of Revenue Services shall grant a credit 73
against the tax imposed under chapter 208 of the general statutes, as 74
applicable, in accordance with the following: 75
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(A) (i) For a taxpayer, as described in subparagraph (A) of 76
subdivision (3) of subsection (a) of this section, holding a tax credit 77
voucher issued on or after January 1, 2026, pursuant to subsections (b) 78
to (g), inclusive, of this section, against the tax imposed under chapter 79
208 of the general statutes in the amount specified in the tax credit 80
voucher. 81
(ii) If the amount of the tax credit voucher exceeds the taxpayer's 82
liability for the tax imposed under chapter 208 of the general statutes, 83
the Commissioner of Revenue Services shall treat such excess as an 84
overpayment and, except as provided in section 12-242g of the general 85
statutes, shall refund the amount of such excess, without interest, to the 86
taxpayer; and 87
(B) (i) For an owner that is a nonprofit corporation holding a tax credit 88
voucher issued on or after January 1, 2026, pursuant to subsections (b) 89
to (g), inclusive, of this section, against the tax due under chapter 208 of 90
the general statutes in the amount specified in the tax credit voucher. 91
(ii) Any unused portion of such credit under this subparagraph may 92
be carried forward to any or all of the four income years following the 93
year in which the tax credit voucher is issued. 94
(2) The Commissioner of Housing shall provide a copy of any 95
voucher issued under this section to the Commissioner of Revenue 96
Services upon the request of the Commissioner of Revenue Services. 97
(i) A credit issued under this section shall not exceed (1) thirty 98
thousand dollars per dwelling unit constructed above existing retail 99
property for an owner that is not a nonprofit corporation, or (2) fifty 100
thousand dollars per such dwelling unit for an owner that is a nonprofit 101
corporation. 102
(j) The aggregate amount of all tax credits that may be reserved by 103
the Commissioner of Housing upon certification of construction plans 104
under subsections (b) to (d), inclusive, of this section shall not exceed 105
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three million dollars in any one fiscal year. 106
(k) The Commissioner of Housing may, in consultation with the 107
Commissioner of Revenue Services, adopt regulations in accordance 108
with the provisions of chapter 54 of the general statutes to carry out the 109
purposes of this section. 110
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2025, and
applicable to taxable years
commencing on and after
January 1, 2026
New section
Statement of Purpose:
To establish a tax credit for the construction of residential dwelling units
above existing retail property.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]