Bill Text: HI SB2277 | 2018 | Regular Session | Introduced

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Bill Title: Relating To Real Property.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2018-01-30 - The committee on HOU deferred the measure. [SB2277 Detail]

Download: Hawaii-2018-SB2277-Introduced.html

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THE SENATE	S.B. NO.	2277
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO real property.

 

 

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

 

     SECTION 1.  The legislature finds that some homeowners may be forced to sell their principal residence at a loss during times of falling home prices.  Such a situation could wipe out their equity in the home and effectively diminish their personal wealth.

     The legislature further finds that homeowners faced with the prospect of an at-loss sale are less likely to sell their homes to pursue new economic opportunities, and borrowers who have fallen into negative equity are fifty per cent less likely to be mobile.  This combination of factors means that unmitigated losses on home sales contribute to economic downturns.

     The legislature further finds that an income tax credit is a viable means of providing financial relief to homeowners who sell their principal residence at a price that is less than the price at which they bought the home.

     The purpose of this Act is to provide an income tax credit to homeowners who sell their principal residence at a price that is less than the original purchase price.

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

     "§235-    Credit on short sale of principal residence.  (a)  There shall be allowed to each individual taxpayer subject to the tax imposed by this chapter a credit against the taxpayer's net income tax liability, if any, equal to the applicable percentage of the loss on the sale of the taxpayer's principal residence for the taxable year in which the credit is properly claimed; provided that no taxpayer may claim this tax credit whose Hawaii adjusted gross income is greater than the median household income for the State.

     (b)  For purposes of subsection (a), the taxpayer's applicable percentage shall be determined as follows:

          Adjusted gross income         Applicable percentage

            Not over $25,000                   25%

            Over $25,000 but                   24%

              not over $30,000

            Over $30,000 but                   23%

              not over $35,000

            Over $35,000 but                   22%

              not over $40,000

            Over $40,000 but                   21%

              not over $45,000

            Over $45,000 but                   20%

              not over $50,000

            Over $50,000                       15%.

     (c)  The credit under subsection (a) shall apply if the taxpayer sells the principal residence at an amount that is        per cent of the original purchase price of the home.

     (d)  If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of credit over liability may be used as a tax credit against the taxpayer's net income tax liability in the 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 tax credit may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax credit.

     (e)  In the alternative to subsection (d), a taxpayer may elect to reduce the eligible credit amount from subsection (a) by thirty per cent and if this reduced amount exceeds the amount of income tax payment due from the taxpayer, the excess of the credit amount over payments due shall be refunded to the taxpayer; provided that tax credit amounts properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.  The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the principal residence is sold.  An election once made is irrevocable.

     (f)  No other credit or deduction may be claimed under this chapter for the loss used to properly claim the tax credit under this section for the taxable year.

     (g)  The total amount of tax credits allowed under this section shall not exceed $2,000,000 for all taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $2,000,000 cap having been met for that taxable year shall be eligible to claim the credit in the subsequent taxable year.

     (h)  The director of taxation shall prepare such forms as may be necessary to claim the credit under this section and may require proof of the claim."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval; provided that section 2 shall apply to taxable years beginning after December 31, 2018.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Income Taxes; Credit for Loss on Sale of Home; Cash Discount; Short Sale

 

Description:

Allows an income tax credit on sales of principal residences that are less than the home's original purchase price, limited by the taxpayer's income, up to an annual statewide cap of $2,000,000.  Allows for a taxpayer to elect to take a discounted amount as a cash refund.

 

 

 

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