SB2595 SD1

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

"§235-A Residential housing; visitability standards; income tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a tax credit for actual costs in the construction or renovation of residential housing. The tax 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.

(b) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for qualified expenses incurred by the entity for the taxable year. The actual costs upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 704 of the Internal Revenue Code.

(c) The amount of the tax credit shall be equal to no more than seventy-five per cent of the actual costs of the taxpayer; provided that the amount of credit shall not exceed the applicable cap amount, which is determined as follows:

(1) Single-family residential property:

(A) If the residential housing is one single-family residential property, $3,000; or

(B) If the residential housing is a development project of several single-family residential units, $300 per unit; provided that the total amount of the tax credit shall not exceed $20,000 per development project; or

(2) Multi-family residential property:

If the residential housing is a multi-family residential property, $300 per unit; provided that the total amount of tax credit shall not exceed $20,000.

There shall be allowed a maximum of one tax credit claimed by a taxpayer under this section for each tax map key on which the residential property is located; provided that a taxpayer claiming a tax credit under this section shall not be allowed to claim a tax credit under section 235-B for the same actual costs incurred.

(d) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;

(2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for the tax credit made under this section; and

(3) May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

(e) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims for the 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 credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) This section shall not apply to taxable years beginning after December 31, 2022.

(g) As used in this section:

"Actual costs" means the costs of construction and renovation that are necessary and directly incurred by the taxpayer to meet the housing visitability standards.

"Housing visitability standards" are minimum standards to provide accessibility and safety for individuals with disabilities when visiting or using residential space, including the following:

(1) At least one zero-step entrance into a home, on an accessible route leading from a driveway or public sidewalk;

(2) Interior doors with at least thirty-two inches of clear passage space through which a wheelchair may be navigated;

(3) At least one wheelchair-accessible full bathroom on the main floor of the home that is large enough for a person to access in a wheelchair and close the bathroom door from inside the bathroom;

(4) At least one accessible bedroom on the main floor of the home;

(5) Hallways with at least thirty-six inches of clear passage to allow maneuvering space for a wheelchair;

(6) Light switches and electrical outlets that are accessible to a person using a wheelchair; and

(7) Smoke detectors that permit both visible and audible detection of an alarm.

§235-B Bed and breakfast; visitability standards; income tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a tax credit for actual costs in the construction or renovation of a bed and breakfast that is registered with the county in which the bed and breakfast is located. The tax 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.

(c) The amount of the tax credit shall be equal to no more than seventy-five per cent of the actual costs of the taxpayer, up to a maximum of $3,000.

There shall be allowed a maximum of one tax credit claimed by a taxpayer under this section for each tax map key on which the bed and breakfast is located; provided that a taxpayer claiming a tax credit under this section shall not be allowed to claim a tax credit under section 235-A for the same actual costs incurred.