HOUSE OF REPRESENTATIVES |
H.B. NO. |
2472 |
TWENTY-NINTH LEGISLATURE, 2018 |
H.D. 1 |
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STATE OF HAWAII |
S.D. 1 |
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A BILL FOR AN ACT
RELATING TO THE LOW-INCOME HOUSING TAX CREDIT.
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) As modified herein, 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. A taxpayer owning a qualified low-income building who has been awarded a subaward under section 1602 of the American Recovery and Reinvestment Act of 2009, Public Law 111-5, shall also be eligible for the credit 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 regardless of whether [or not]
the taxpayer claims a federal low-income housing tax credit pursuant to section
42 of the Internal Revenue Code.
(c) For any qualified low-income building that receives an allocation prior to January 1, 2017, 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.
(d) For any qualified low-income building that receives an allocation after December 31, 2016, the amount of the low-income housing tax credits that may be claimed by a taxpayer as provided in subsection (b) shall be:
(1) For the first five
years, equal to the amount of the federal low-income housing tax credits that
have been allocated to the qualified low-income building pursuant to section
42(b) of the Internal Revenue Code by the corporation[,];
provided that[,] if in any year the aggregate amount of credits under
this subsection would be such that it would exceed the amount of state credits
allocated by the corporation for the qualified low-income building, the credits
allowed for that year shall be limited to such amount necessary to bring the
total of such state credits (including the current year state credits) to the
full amount of state credits allocated to the qualified low-income building by
the corporation;
(2) For the sixth year, zero, except that, if, and only if, the amount of credits allowed for the first five years is less than the full amount of state credits allocated by the corporation for the qualified low-income building, an amount necessary to bring the amount of the state credits to the full amount allocated by the corporation for the qualified low-income building; and
(3) For any remaining
years, zero.
(e) If a subaward under section 1602 of the American Recovery and Reinvestment Act of 2009, Public Law 111-5, has been issued for a qualified low-income building, the amount of the low-income housing tax credits that may be claimed by a taxpayer as provided in subsection (b) shall be equal to fifty per cent of the amount of the federal low-income housing tax credits that would have been allocated to the qualified low-income building pursuant to section 42(b) of the Internal Revenue Code by the corporation had a subaward not been awarded with respect to the qualified low‑income building.
(f) 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); and
(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; [and
(5) Application of
at-risk rules shall be made under section 42(k);]
of the Internal Revenue Code.
(g) As provided in section 42(e)[,] of
the Internal Revenue Code, rehabilitation expenditures shall be treated as
a separate new building and their treatment under this section shall be the
same as in section 42(e)[.] of the Internal Revenue Code. The definitions and special rules relating to
credit period in section 42(f) and the definitions and special rules in section
42(i) of the Internal Revenue Code shall be operative for the purposes
of this section.
(h) The state housing credit ceiling under section
42(h) of the Internal Revenue Code 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[.] of
the Internal Revenue Code.
(i) 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 that 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 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 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 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.]
(j) For a qualified low-income building that
receives an allocation of credits after December 31, 2018:
(1) Section 453 (with respect to the
installment method), section 465 (with respect to deductions limited to amount
at risk), and section 469 (with respect to passive activity losses and credits
limited) of the Internal Revenue Code shall not be operative with respect to
investments made in buildings and projects claiming the credit under this section;
(2) All allocations to partners of their
distributive shares of income, loss, and deductions under this chapter shall be
made in proportion to the partner's allocation of credits under this section;
and
(3) In no event shall the amount of state
credits allocated by the corporation for the qualified low-income building
exceed fifty per cent of the amount of federal credits allocated to such
building.
[(j)] (k) In lieu of the credit awarded under this
section for a qualified low-income building that has been awarded federal
credits that are subject to the state housing credit ceiling under section
42(h)(3)(C) of the Internal Revenue Code, federal credits that are allocated
pursuant to section 42(h)(4) of the Internal Revenue Code, or a subaward under
section 1602 of the American Recovery and Reinvestment Act of 2009, Public Law
111-5, the taxpayer owning the qualified low-income building may make a request
to the corporation for a loan under section 201H-86. If the taxpayer elects to receive the loan
pursuant to section 201H-86, the taxpayer shall not be eligible for the credit
under this section.
[(k)] (l) The director of taxation may adopt any rules [under]
pursuant to chapter 91 and forms necessary to carry out this section.
(m) For purposes of this section, "corporation" means the Hawaii housing finance and development corporation."
SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 3. This Act shall take effect on July 1, 2050, and shall apply to qualified low-income buildings that receive an allocation of credits beginning after December 31, 2018; provided that the amendments made to section 235-110.8, Hawaii Revised Statutes, by section 1 of this Act shall not be repealed when that section is reenacted on December 31, 2021, pursuant to section 4 of Act 129, Session Laws of Hawaii 2016.
Report Title:
Tax Credits; Low-income Housing Tax Credit
Description:
Specifies that certain provisions of the Internal Revenue Code related to at-risk rules and deductions and to passive activity loss do not apply with respect to claims for the state low-income housing tax credit. Caps the state low-income housing tax credit at fifty per cent of the federal low-income housing tax credit. Takes effect on 07/01/2050. (SD1)
The summary description
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not legislation or evidence of legislative intent.