SB708

THE SENATE	S.B. NO.	708
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII

A BILL FOR AN ACT

relating to taxation.

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

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235‑ Historic preservation tax credit. (a) Each taxpayer (whether for profit or nonprofit) who files a net income tax return for a taxable year may claim a tax credit under this section. The tax credit shall be deductible from the taxpayer's net income tax return liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The amount of the tax credit shall be twenty-five per cent of qualified expenditures totaling more than $10,000 and incurred for the rehabilitation of a historic property.

(b) Tax credits that exceed the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability for up to five subsequent years.

(c) Any nonprofit taxpayer that has not claimed the tax credit under this section, in whole or part, may assign, transfer, or convey the credit, in whole or in part, by sale or otherwise to any individual or entity. The assignee of any tax credits may use acquired credits to offset up to per cent of the tax liabilities otherwise imposed pursuant to chapter 235. The assignee may apply the tax credit against taxes imposed on the assignee until the end of the taxable year after the year in which the rehabilitated historic property is placed in service, or until the full credit assigned is used, whichever occurs first. Fiscal year assignees may claim the credit until the expiration of the fiscal year that ends within the taxable year after the year in which the rehabilitated historic property is placed in service. The assignor shall perfect the transfer by notifying the department in writing within thirty calendar days following the effective date of the transfer and shall provide any information that may be required by the department to administer and carry out this section.

(d) For purposes of this section, any assignment or sales proceeds received by the taxpayer for its assignment or sale of the tax credits allowed pursuant to this section shall be exempt from taxation under this chapter.

(e) As used in this section:

"Historic property" means property located within the State that is:

(1) Individually listed in the National Register of Historic Places;

(2) Located in a historic district listed in the National Register of Historic Places and certified by the United States Secretary of the Interior as contributing to the historic significance of that district;

(3) Individually designated as a historic property by the Hawaii historic places review board; or

(4) Located in a historic district set apart or registered by a county, acknowledged by the Hawaii historic places review board as contributing to the historic significance of the area, and determined by the Hawaii historic places review board as meeting the criteria for inclusion in the National Register.

"Qualified expenditures" mean any properly chargeable amount incurred for the rehabilitation and restoration of the physical elements of a building, including the historic decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing systems to applicable building codes. Qualified expenditures do not include the taxpayer's personal labor; the cost of purchasing the historic property; any improvements made to the landscaping or other site features, outbuildings, or garages; or any other costs the director deems inappropriate. A taxpayer may request an opinion from the director as to whether a planned improvement is qualified. The director shall issue a written opinion within thirty days of receipt of the request.

(f) The director of taxation shall prepare forms to claim a credit under this section. The director may require the taxpayer to furnish additional information to ascertain the validity of the claim for credit under this section, which may include photographs of the property and written declarations from persons knowledgeable about the property. The director, with the assistance of the department of land and natural resources, division of historic preservation, may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2006.

INTRODUCED BY:	_____________________________