Report Title:

Tax Credits; Housing; Condominiums

Description:

Provides tax credits for renovating existing apartments and developing housing for persons in the middle-income. Also requires an unspecified percentage of new condominiums be dedicated to rental use.

HOUSE OF REPRESENTATIVES

H.B. NO.

1093

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO HOUSING.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Middle-income apartment housing tax credit. (a) There shall be allowed to each taxpayer who is subject to the taxes imposed by this chapter a tax credit for the qualified costs in the development of middle-income apartment housing. The tax credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter.

(b) The tax credit earned shall be equal to the qualified costs incurred, up to a maximum of $ of credits in the aggregate for all qualified taxpayers for all years; provided that notwithstanding the amount of tax credits earned in any year, a maximum of $ of tax credits in the aggregate for all qualified taxpayers may be used in any one taxable year.

(c) In the case of a partnership, limited liability company, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for qualified costs incurred by the entity. The costs upon which the tax credit is computed shall be determined at the entity level.

(d) To qualify for the tax credit, a taxpayer shall have expended qualified costs to develop middle-income apartment housing; provided that at least per cent of the apartments are rented to middle-income tenants.

(e) If the tax credit under this section exceeds $ , in the aggregate for all qualified taxpayers for any taxable year or exceeds the taxpayer's tax liability under this chapter for any year for which the credit is taken, the excess of the tax credit may be used as a credit against the taxpayer's tax liability for the taxes set forth in this section in subsequent years until exhausted.

(f) Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(g) If, at any time the costs incurred no longer meet the definition of qualified costs, the credits claimed under this section shall be recaptured. The recapture shall be equal to one hundred per cent of the total tax credits claimed under this section for the preceding taxable year; provided that the amount of the credits recaptured shall apply only to those costs that no longer meet the definition of qualified costs. The amount of the recaptured tax credits determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

(h) If any credit is claimed under this section, then the taxpayer shall not claim any other tax credit under any other chapter for the same qualified costs for which a credit is claimed under this section.

(i) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claims for credits made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(j) As used in this section:

"Middle income" means:

(1) A married couple filing a joint return under section 235-93, with a federal adjusted gross income of not less than $ , nor more than $ ;

(2) A head of household as that term is defined in section 2(b) of the Internal Revenue Code, with a federal adjusted gross income of not less than $ , nor more than $ ;

(3) An individual who is not married and who is not a surviving spouse or head of household with a federal adjusted gross income of not less than $ , nor more than $ ; or

(4) A married individual filing a separate tax return with a federal adjusted gross income of not less than

$ , nor more than $ .

"Qualified costs" means any costs for the plans, design, or construction of, or for equipment that is permanently affixed to, a building or structure that is related to the middle-income apartment housing that is the object of the tax credit that is provided under this section; provided that "qualified costs" shall not include land acquisition costs."

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Apartment renovation tax credit. (a) There shall be allowed to each taxpayer who is subject to the taxes imposed by this chapter, a tax credit for the qualified costs for the renovation of any apartment unit. The tax credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter.

(b) The tax credit earned shall be equal to the qualified costs incurred, up to a maximum of $ , of credits in the aggregate for all qualified taxpayers for all years; provided that notwithstanding the amount of tax credits earned in any year, a maximum of $ of tax credits in the aggregate for all qualified taxpayers may be used in any one taxable year.

(c) In the case of a partnership, limited liability company, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for qualified costs incurred by the entity. The costs upon which the tax credit is computed shall be determined at the entity level.

(d) To qualify for the tax credit, a taxpayer shall have expended qualified costs to renovate an apartment unit.

(e) If the tax credit under this section exceeds $          , in the aggregate for all qualified taxpayers for any taxable year or exceeds the taxpayer's tax liability under this chapter for any year for which the credit is taken, the excess of the tax credit may be used as a credit against the taxpayer's tax liability for the taxes set forth in this section in subsequent years until exhausted.

(f) Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(g) If, at any time the costs incurred no longer meet the definition of qualified costs, the credits claimed under this section shall be recaptured. The recapture shall be equal to one hundred per cent of the total tax credits claimed under this section for the preceding taxable year; provided that the amount of the credits recaptured shall apply only to those costs that no longer meet the definition of qualified costs. The amount of the recaptured tax credits determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

(h) If any credit is claimed under this section, then the taxpayer shall not claim any other tax credit under any other chapter for the same qualified costs for which a credit is claimed under this section.

(i) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claims for credits made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(j) As used in this section, "qualified costs" means any costs for the plans, design, or construction of, or for equipment that is permanently affixed to, a building or structure that is related to renovating an apartment unit; provided that "qualified costs" shall not include land acquisition costs."

SECTION 3. Chapter 514A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§514A- Rental apartments; developer requirements. Notwithstanding any other law to the contrary, at least per cent of the apartments sold in any condominium project shall be offered for sale with the condition that the apartments be rented to the general public; provided that, in the case of a project with rental apartments being converted to condominium status, the tenants of the rental apartments in the project shall be given priority with respect to tenancy in that project after the sale."

SECTION 4. Act 164, Session Laws of Hawaii 2004, is amended by adding a new section to be appropriately designated and to read as follows:

"§ - Rental apartments; developer requirements. Notwithstanding any other law to the contrary, at least per cent of the apartments sold in any condominium project shall be offered for sale with the condition that the apartments be rented to the general public; provided that, in the case of a project with rental apartments being converted to condominium status, the tenants of the rental apartments in the project shall be given priority with respect to tenancy in that project after the sale."

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2005; provided that section 3 shall not take effect if the contingent amendment addressed in section 35(5) of Act 164, Session Laws of Hawaii 2004, takes effect on July 1, 2005; and provided further that section 4 shall not take effect if the contingent amendment addressed in section 35(5) of Act 164, Session Laws of Hawaii 2004, does not take effect on July 1, 2005.

INTRODUCED BY:

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