Report Title:

Sunset Date Residential Construction and Remodeling Tax Credit

Description:

Extends tax credit established by Act 10, Third Special Session Laws 2001, as amended by Act 174, Session Laws 2002.

THE SENATE

S.B. NO.

1039

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

Relating to the residential construction and remodeling income tax credit.

 

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

SECTION 1. The purpose of this Act is to further stimulate economic activity in the residential construction industry by making permanent the credit for construction or remodeling costs established by Act 10, Third Special Session Laws of Hawaii 2001, as amended by Act 174, Session Laws of Hawaii 2002.

SECTION 2. Act 10, Third Special Session Laws of Hawaii 2001, as amended by Act 174, Session Laws of Hawaii 2002, is amended by amending section 1 to amend section 235- , Hawaii Revised Statutes, to amend subsection (a) to read as follows:

"(a) There shall be allowed to each taxpayer who is the owner, developer, or lessee of residential real property, subject to the taxes imposed by this chapter, a residential construction and remodeling tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The amount of the tax credit claimed under this section by the taxpayer in all years for which the credit is available shall be limited to four per cent of the residential construction or remodeling costs incurred during the taxable year for which the credit is claimed; provided that the costs shall not exceed $250,000 in the aggregate for each residential unit[; and that the costs are incurred before July 1, 2003].

In the case of a partnership, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for construction or remodeling costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the construction or remodeling cost for which the deduction is taken.

The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income."

SECTION 3. Statutory material to be repealed is bracketed and stricken.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2002.

INTRODUCED BY:

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