The "New Jersey Neighborhood Homes Investment Act" establishes a gross income tax credit aimed at promoting certain residential developments, particularly for owner-occupied homes. The bill allows project sponsors who finance the construction or substantial renovation of qualified residences to receive a tax credit equal to the amount by which reasonable development costs exceed the price paid by qualified homeowners in affordable sales. However, the 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 median household income for the state. 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 for early departure based on the time spent in the home. The bill mandates that HMFA adopt necessary rules and regulations within four months of enactment, and it will take effect on the first day of the fourth month following its passage.