Low-Income Housing; Tax Credits
Reduces the period over which state low-income housing tax credits are taken from ten years to five years. (HB3059 HD1)
HOUSE OF REPRESENTATIVES
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO LOW-INCOME HOUSING TAX CREDITS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-110.8, Hawaii Revised Statutes, is amended to read as follows:
"§235-110.8 Low-income housing tax
credit. (a) Section 42 (with respect to low-income housing credit) of the
Internal Revenue Code shall be operative for the purposes of this chapter as
provided in this section[
.], except as provided otherwise in this
(b) Each taxpayer subject to the tax imposed
by this chapter, who has filed [
a[ ]] net income tax return for
a taxable year may claim a low-income housing tax credit against the taxpayer's
net income tax liability. The amount of the credit 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 on a timely basis. A
credit under this section may be claimed whether or not the taxpayer claims a
federal low-income housing tax credit pursuant to [ section] Section
42 of the Internal Revenue Code.
(c) The low-income housing tax credit shall be
fifty per cent of the applicable percentage of the qualified basis of each
building located in Hawaii. The applicable percentage shall be calculated as
provided in [
section] Section 42(b) of the Internal Revenue Code.
(d) For the purposes of this section, the determination of:
(1) Qualified basis and qualified low-income building
shall be made under [
section] Section 42(c);
(2) Eligible basis shall be made under [
(3) Qualified low-income housing project shall be
made under [
section] Section 42(g);
(4) Recapture of credit shall be made under [
Section 42(j), except that the tax for the taxable year shall be
increased under [ section] Section 42(j)(1) only with respect to
credits that were used to reduce state income taxes;
(5) Application of at-risk rules shall be made under [
of the Internal Revenue Code.
(e) As provided in [
42(e), rehabilitation expenditures shall be treated as separate new building
and their treatment under this section shall be the same as in [ section]
Section 42(e). The definitions and special rules relating to credit
period in [ section] Section 42(f) and the definitions and special
rules in [ section] Section 42(i) shall be operative for the
purposes of this section.
(f) The state housing credit ceiling under [
Section 42(h) shall be zero for the calendar year immediately following
the expiration of the federal low-income housing tax credit program and for any
calendar year thereafter, except for the carryover of any credit ceiling amount
for certain projects in progress which, at the time of the federal expiration,
meet the requirements of [ section] Section 42.
(g) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. For the purpose of deducting this tax credit, net income tax liability means net income tax liability reduced by all other credits allowed the taxpayer under this chapter.
A tax credit under this section which exceeds
the taxpayer's income tax liability may be used as a credit against the
taxpayer's income tax liability in subsequent years until exhausted. All
claims for a tax credit under this section must 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 properly and timely claim the credit shall constitute
a waiver of the right to claim the credit. A taxpayer may claim a credit under
this section only if the building or project is a qualified low-income housing
building or a qualified low-income housing project under [
42 of the Internal Revenue Code.
Section 469 (with respect to passive activity losses and credits limited) of the Internal Revenue Code shall be applied in claiming the credit under this section.
(h) In the case of any qualified low-income housing project placed in service beginning on January 1, 2009, Section 42(b)(2)(B) of the Internal Revenue Code shall be modified as follows: the percentages prescribed by the Secretary for any month shall be percentages that will yield over a five-year period amounts of credit under subsection (a) that have present value equal to:
(1) Seventy per cent of the qualified basis of a building described in paragraph (1)(A); and
(2) Thirty per cent of the qualified basis of a building described in paragraph (1)(B).
(i) In the case of any qualified low-income housing project placed in service beginning on January 1, 2009, Section 42(f)(1) of the Internal Revenue Code shall be modified as follows: the term "credit period" means, with respect to any building, the period of five taxable years beginning with:
(1) The taxable year in which the building is placed in service; or
(2) At the election of the taxpayer, the succeeding taxable year,
but only if the building is a qualified low-income building as of the close of the first year of such period. The election under paragraph (2), once made, shall be irrevocable.
(h)] (j) The director of
taxation may adopt any rules under chapter 91 and forms necessary to carry out
SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 3. This Act shall take effect on January 1, 2020.