Report Title:
Residential Construction and Remodeling Tax Credit; Extended
Description:
Extends the residential construction and remodeling tax credit to 2006. After 12/31/03, requires that in order to qualify for the tax credit, work must be done by an in-state contractor.
THE SENATE |
S.B. NO. |
362 |
TWENTY-SECOND LEGISLATURE, 2003 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to taxation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-110.45, Hawaii Revised Statutes, is amended to read as follows:
"[[]§235-110.45[]] Residential construction and remodeling tax credit. (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.] 2006.
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.
(b) The credit allowed under this section shall be claimed against the net income tax liability, if any, imposed by this chapter for the taxable year in which the tax credit is properly claimed.
(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, 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. (d) 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 claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.
(e) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2000, and shall not be available for taxable years beginning after December 31, [2003.] 2006.
(f) To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.
(g) As used in this section:
"Construction or remodeling cost" means any costs incurred after December 31, 2000, for plans, design, construction, and equipment that is permanently affixed to the building or structure related to new construction, alterations, or modifications to a residential apartment unit or house, and shall not include any costs for which another credit was claimed under this chapter[.]; provided that after December 31, 2003, the term a "construction or remodeling cost" shall be limited to costs for construction or remodeling conducted by in-state contractors.
"In-state contractor" means a contractor that:
(1) Is licensed pursuant to chapter 444;
(2) Is licensed to conduct business in the State pursuant to section 237-9;
(3) If other than an individual, is a domestic corporation, partnership, limited liability company, or business organized under the laws of the State;
(4) Has maintained its principal place of business within the State for at least two hundred consecutive days prior to the commencement of construction or remodeling;
(5) Has filed a Hawaii resident income tax return and all other applicable tax returns for the preceding tax year and has paid all amounts owing on those tax returns;
(6) Is in compliance with all applicable Hawaii employment, insurance, and workers' compensation laws;
(7) Is comprised of employees that are all state residents;
(8) Conducted the construction and remodeling under the name appearing on the contractor's current contracting or business license; and
(9) If a joint venture, is composed entirely of entities that qualify under paragraphs (1) to (8).
"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.
"State resident" means a person who has lived continuously in the State for a period of six months prior to the commencement of the construction or remodeling subject to this section during which the person worked, and the person has not established residency in another jurisdiction during that time period."
SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 3. This Act shall take effect upon its approval.
INTRODUCED BY: |
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