Bill Text: HI HB1043 | 2010 | Regular Session | Amended
Bill Title: Low-Income Housing Tax Credits
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2009-05-11 - Carried over to 2010 Regular Session. [HB1043 Detail]
Download: Hawaii-2010-HB1043-Amended.html
Report Title:
Low-Income Housing Tax Credits
Description:
Makes state low-income housing tax credits more valuable by shortening the period over which the credits can be taken from ten years to five years. Authorizes the election of the maximum amount of grant in lieu of tax credits authorized under the American Recovery and Reinvestment Act of 2009. Authorizes the state low-income housing tax credit to be taken with federal low-income housing tax credits as authorized under the American Recovery and Reinvestment Act of 2009. Effective 7/1/2030. (SD1)
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1043 |
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TWENTY-FIFTH LEGISLATURE, 2009 |
H.D. 1 |
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STATE OF HAWAII |
S.D. 1 |
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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. The purpose of this Act is to address state low-income housing tax credits.
Part I of this Act reduces the period over which credits may be claimed from ten years to five years. The legislature finds that the reduction should make the credits more valuable to investors.
Part II of this Act addresses the election of a federal grant in lieu of a portion of the state tax credit allocation for 2009, as authorized by the American Recovery and Reinvestment Act of 2009.
PART I
SECTION 2. Section 235-110.8, Hawaii Revised Statutes, is amended to read as follows:
"§235-110.8 Low-income housing tax
credit. (a) Except for Section 42(b) of the Internal Revenue Code,
which shall not be operative for purposes of this chapter, Section 42 (with
respect to the low-income housing credit) of the Internal Revenue Code
shall be operative for [the] purposes of this chapter as provided in
this section.
(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 amount of the low-income
housing tax credit that may be claimed by a taxpayer as provided in
subsection (b) 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 42(b) of the Internal
Revenue Code.] equal to the amount of the federal low-income housing tax
credit that the taxpayer claimed or could have claimed pursuant to Section 42
of the Internal Revenue Code for the same taxable year with respect to each
qualified low‑income building located in Hawaii; provided that, for
purposes of subsection (b), the taxpayer may claim a low-income housing tax
credit only with respect to the amount of the federal low-income housing tax
credit claimed for the first five years of the credit period (as defined in Section
42(f)(1) of the Internal Revenue Code, without regard to section 235‑110.8(f))
for each respective qualified low-income building, as defined in Section
42(f)(1) of the Internal Revenue Code that is located in Hawaii; provided
further that the amount of the low-income housing tax credit claimed by a
taxpayer shall be computed without regard to any federal low-income housing tax
credit that is carried forward from a prior taxable year.
(d) For the purposes of this section, the determination of:
(1) Qualified basis and qualified low-income building shall be made under section 42(c);
(2) Eligible basis shall be made under section 42(d);
(3) Qualified low-income housing project shall be made under 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 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 section 42(k);
of the Internal Revenue Code.
(e) As provided in section 42(e),
rehabilitation expenditures shall be treated as separate new building and their
treatment under this section shall be the same as in section 42(e). [The
definitions and special rules relating to credit period in section 42(f) and
the] The definitions and special rules in section 42(i) shall be
operative for the purposes of this section.
(f) The definitions and special rules relating to credit periods in section 42(f) shall be operative for the purposes of this section; except that 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;
provided that 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.
[(f)] (g) 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 42.
[(g)] (h) 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 [section]
Section 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)] (i) The director of
taxation may adopt any rules under chapter 91 and forms necessary to carry out this
section."
PART II
SECTION 3. (a) Under Section 1602(b) of the American Recovery and Reinvestment Act of 2009, the State of Hawaii may elect to receive a low-income housing grant in lieu of the low‑income housing tax credit allocation for 2009. The maximum low-income housing grant election amount for the State may not exceed eighty-five per cent of the product of ten and the sum of the following:
(1) The State's unused housing credit ceiling for 2008;
(2) Any returns to the State during 2009 of credit allocations previously made by the State;
(3) Forty per cent of the State's 2009 credit allocation; and
(4) Forty per cent of the State's share of the national pool allocated in 2009, if any.
(b) If the grant is transmitted to the State, rather than held by the United States Secretary of the Treasury in a federal account, the grant shall be deposited into the housing finance revolving fund.
(c) The Hawaii housing finance and development corporation shall serve as the "state housing credit agency" for the purpose of making subawards of the grant in accordance with the American Recovery and Reinvestment Act of 2009. The corporation shall comply with all applicable provisions of that Act in the administration of the low-income housing grants.
SECTION 4. If applicable pursuant to section 3(b) there is appropriated out of the housing finance revolving fund the low‑income housing grant received pursuant to section 3 for making subawards in fiscal year 2009-2010 and fiscal year 2010‑2011 for the purposes authorized under Section 1602 of the American Recovery and Reinvestment Act of 2009.
If applicable, the appropriation shall be expended by the Hawaii housing finance and development corporation for the purpose of this part.
SECTION 5. A qualified low-income building that has been awarded a subaward under Section 1602 of the American Recovery and Reinvestment Act of 2009 shall also be eligible for the low‑income housing tax credit provided in section 235-110.8, Hawaii Revised Statutes.
PART III
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect on July 1, 2030, and apply to qualified low-income buildings placed in service after December 31, 2009; except that part II shall take effect upon its approval.
