HOUSE OF REPRESENTATIVES	H.B. NO.	1782
TWENTY-NINTH LEGISLATURE, 2018		H.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO FIRE PROTECTION.

 

 

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

 

     SECTION 1.  The legislature finds that eight out of ten deaths caused by fire occur in the home.  Automatic fire sprinkler systems have a proven record of significantly reducing loss of life, injury, and property damage caused by fires.  Only the sprinkler head closest to the fire will activate and eighty-five per cent of fires are contained by the operation of just one sprinkler.

     Today's newer homes pose inherent fire hazards that not only affect the occupants, but also firefighters.  These hazards include:

     (1)  Engineered lumber now used as a composite joist or beam as part of today's modern, lightweight construction materials.  Compared with traditional wood materials in older homes, lightweight construction assemblies collapsed in six minutes versus eighteen minutes for wood;

     (2)  Modern furnishings burn quicker and hotter than traditional legacy furnishings; and

     (3)  Open plan designs contribute to rapid fire spread. Higher ceiling heights and open plan designs with less compartmentalization provide larger volumes of oxygen to promote fire spread.

     Residential sprinklers in one- and two-family dwellings are rare and retrofitting residential high-rises is very costly.  The legislature finds that an incentive is needed to encourage the installation of fire sprinklers in new homes and lower the financial impact to the owners of existing high-rise condominiums and apartments who may be required or voluntarily choose to retrofit with fire sprinklers.

     The purpose of this Act is to provide an incentive for an owner-occupant to install an automatic fire sprinkler system in a building that is used for residential purposes by establishing a tax credit for a percentage of the actual cost of the system, including installation, water, and permit fees.

     SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

     "§235-    Installation of fire sprinklers in residences; income tax credit.  (a)  Any qualifying taxpayer who is an owner-occupant and files an individual income tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual net income tax for taxable years beginning after December 31, 2018 but not to taxable years beginning after December 31, 2028.

     (b)  The tax credit may be claimed for an eligible automatic fire sprinkler system that is installed and placed in service by the taxpayer during the taxable year in any new or existing residential occupancy, including one- and two-family dwellings and condominiums and apartments in a building that is used only for residential purposes.  The tax credit that may be claimed for each automatic sprinkler system shall be no more than       per cent of the actual cost of the system, including installation, water, and permit fees; provided that:

     (1)  Only the owner-occupant of the dwelling in a new or existing residential occupancy used for residential purposes shall be entitled to a single tax credit;

     (2)  Only one credit may be claimed per tax map key number; and

     (3)  The amount of the credit taken shall not exceed the lesser of       per cent of the actual cost of the system or $        .

     (c)  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. No deduction shall be allowed for that portion of otherwise deductible qualified costs for which a credit is claimed under this section.

     (d)  If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over payments due shall be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

     (e)  The director of taxation shall prepare forms that may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91 necessary to carry out this section.

     (f)  All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

     (g)  Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2018, but not to taxable years beginning after December 31, 2028.

 

 

Report Title:

State Fire Council Package; Fire Protection; Residential Sprinklers; Tax Credit

 

Description:

Establishes an income tax credit based on the actual cost, including installation, water, and permit fees, of an automatic fire sprinkler system in any residential occupancy in a building used for residential purposes.  Applies to taxable years beginning after 12/31/18 but not to taxable years after 12/31/28.  (HB1782 HD1)

 

 

 

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