SB1962 HD1

SECTION 1. The purpose of this Act is to establish an income tax deduction for owner-occupants or renters of condominium housing units for qualifying costs of automatic fire sprinkler systems installed and placed into service after December 31, 2007.

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

"§235- Automatic fire sprinkler system; income tax deduction. (a) There shall be allowed as a deduction from gross income the qualifying costs paid during the taxable year by an individual taxpayer or a married couple filing a joint return or filing separately, for installation of an automatic fire sprinkler system in a residential or mixed use condominium constructed before December 31, 1975; provided that:

(1) The individual taxpayer or married couple filing a joint return or filing separately are owner‑occupants or renters of the residential or mixed use unit in a condominium; and

(2) Owner-occupants claiming the deduction shall have occupied the unit for a minimum of years.

(b) The deduction shall be equal to the qualifying costs, or a maximum of $ per unit, whichever is less, for the automatic fire sprinkler system placed into service after December 31, 2007.

(1) Shall require the taxpayer to furnish reasonable information to ascertain the validity of the claim for a tax deduction made under this section; and

(2) May adopt rules necessary to effectuate this section pursuant to chapter 91.

(d) For the purposes of this section:

"Automatic fire sprinkler system" means an integrated system of underground and overhead piping designed in accordance with fire protection engineering standards, the properties of which shall include:

(1) That the portion of the automatic fire sprinkler system that is above ground shall consist of a network of specially sized or hydraulically designed piping installed in a building, structure, or area, generally overhead and to which sprinklers are connected in a systematic pattern;

(2) That the valve controlling each system riser shall be located in the system riser or its supply piping;

(3) That each sprinkler system riser shall include a device for activating an alarm when the system is in operation; and

(4) That the device shall be normally activated by heat from a fire and discharges water over the fire area.

"Qualifying costs" means costs incurred in purchasing or otherwise acquiring and installing an automatic fire sprinkler system to serve the entire residential or mixed use condominium, including but not limited to accessories and installation, professional fees for design and construction, and government permit and access fees; provided that the qualifying costs of a residential or mixed use condominium may be calculated using the portion of maintenance fees allocable to qualifying costs."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2007, for costs incurred between July 1, 2007, and June 30, 2012.

THE SENATE	S.B. NO.	1962
TWENTY-FOURTH LEGISLATURE, 2007		S.D. 2
STATE OF HAWAII		H.D. 1