H.B. NO.














relating to taxation.





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

     "§235-    Homeownership development tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter and chapter 237D, an income tax credit, which 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.

     (b)  The amount of the tax credit shall be fifty per cent of the value of the contribution by an eligible developer to an eligible project made during the taxable year, up to a maximum credit amount of $250,000.

     (c)  In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for contribution 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 in accordance with section 704(b) of the Internal Revenue Code.

     (d)  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 contribution for which the deduction is taken.

     (e)  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 for a tax credit under this section, including amended claims, 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.

     (f)  Any taxpayer wishing to claim a credit under this section shall submit a proposal to the department of taxation, which includes:

     (1)  A description of the eligible project;

     (2)  A description of the area in which the project is located;

     (3)  A resolution from the county in which the project is located that the project is consistent with local plans and regulations; and

     (4)  Such supporting information as may be required by rule.

     (g)  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.

     (h)  The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2017.

     (i)  To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations, including the Davis-Bacon Act and chapter 104.

     (j)  For the purpose of this section:

     "Contribution" includes cash, property, goods donated, and services to assist or facilitate development and management; land acquisition; downpayment and closing assistance; housing counselling and marketing fees; or the removal of liens recorded against residential property by municipal, county, or special-district local governments relating to an eligible project.

     "Eligible project" means construction or renovation in specific, identifiable single-unit or multiple-unit residential properties for the purpose of providing homeownership opportunities to low-income households or very-low-income households."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect upon its approval.














Report Title:

Tax Credit; Homeownership Development; Low-income Housing



Creates a 50% tax credit to a maximum of $250,000 for costs involved in projects that provide housing for low-income and very-low-income residents.




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