The "New Jersey Neighborhood Homes Investment Act" establishes a gross income tax credit aimed at promoting certain residential developments, particularly for affordable homeownership. The bill allows project sponsors who finance the construction or substantial renovation of qualified residences to receive a tax credit equal to the difference between reasonable development costs and the affordable sale price paid by qualified homeowners. However, this tax credit is capped at 35 percent of the lesser of the total reasonable development costs or 80 percent of the median sales price for new homes in New Jersey. Additionally, the New Jersey Housing and Mortgage Finance Agency (HMFA) is tasked with creating regulations for an alternative calculation of the tax credit for substantial rehabilitations of homes already owned by qualified homeowners.

To qualify for the program, a project must involve either the substantial rehabilitation of a qualified residence owned by a qualified homeowner or the construction of a new residence for eligible purchasers. Both qualified homeowners and eligible purchasers must have household incomes at or below 140 percent of the state's median household income. The bill also stipulates that affordable sales must not exceed a price determined by the median household income of the county, multiplied by three. Furthermore, eligible purchasers must commit to residing in the home for at least five years, with penalties imposed for early relocation. The HMFA is required to adopt necessary rules and regulations to implement the act within four months of its enactment.