Bill Text: HI HB939 | 2024 | Regular Session | Amended
Bill Title: Relating To The Individual Housing Account Program.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2023-12-11 - Carried over to 2024 Regular Session. [HB939 Detail]
Download: Hawaii-2024-HB939-Amended.html
HOUSE OF REPRESENTATIVES |
H.B. NO. |
939 |
THIRTY-SECOND LEGISLATURE, 2023 |
H.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO THE INDIVIDUAL HOUSING ACCOUNT PROGRAM.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the affordable housing crisis continues to be one of the State's most significant and challenging social problems and is a critical issue for many Hawaii residents. As the cost of housing increases, the State must continue to assist residents by finding methods of increasing options for homeownership. Saving for a down payment on a home loan continues to be a barrier for many Hawaii residents, with a limited number of programs available to assist in this endeavor.
The purpose of this Act
is to update the individual housing accounts law by increasing the contribution
levels and maximum account levels to reflect current housing prices more
accurately. This will allow taxable
income to be reduced by contributions to the first-time home buyer savings
account, thus encouraging first time home ownership by incentivizing saving for
a down payment and closing costs. This
incentive acknowledges the significant financial and civic benefits of home
ownership in the State.
SECTION 2. Section 235-5.5, Hawaii Revised Statutes, is amended as follows:
1. By amending subsections (a) and (b) to read:
"(a) There shall be allowed as a deduction from
gross income the amount, not to exceed [$5,000,] $15,000, paid in
cash during the taxable year by an individual taxpayer to an individual housing
account established for the individual's benefit to provide funding for the
purchase of the individual's first principal residence. A deduction not to exceed [$10,000] $30,000
shall be allowed for a married couple filing a joint return. No deduction shall be allowed on any amounts
distributed less than three hundred sixty-five days from the date on which a
contribution is made to the account. Any
deduction claimed for a previous taxable year for amounts distributed less than
three hundred sixty-five days from the date on which a contribution was made
shall be disallowed and the amount deducted shall be included in the previous
taxable year's gross income and the tax reassessed. The interest paid or accrued within the
taxable year on the account shall not be included in the individual's gross
income. For purposes of this section, [the
term] "first principal residence" means a residential property
purchased with the payment or distribution from the individual housing account,
which shall be owned and occupied as the only home by an individual who did not
have any interest in, individually, or whose spouse did not have any interest
in, if the individual is married, a residential property within the last five
years of opening the individual housing account.
In the case of a married couple
filing separate returns, the sum of the deductions allowable to each of them
for the taxable year shall not exceed [$5,000,] $15,000, or [$10,000]
$30,000 for a joint return, for amounts paid in cash, excluding interest
paid or accrued thereon.
The amounts paid in cash allowable
as a deduction under this section to an individual for all taxable years shall
not exceed [$25,000,] $200,000, excluding interest paid or
accrued. In the case of married
individuals having separate individual housing accounts, the sum of the
separate accounts and the deduction under this section shall not exceed [$25,000,]
$200,000, excluding interest paid or accrued thereon.
(b)
For purposes of this section, [the term] "individual housing
account" means a trust created or organized in Hawaii for the exclusive
benefit of an individual, or, in the case of a married individual, for the
exclusive benefit of the individual and spouse jointly, but only if the written
governing instrument creating the trust meets the following requirements:
(1) Contributions
shall not be accepted for the taxable year in excess of [$5,000] $15,000
(or [$10,000] $30,000 in the case of a joint return) or in excess
of [$25,000] $200,000 for all taxable years, exclusive of
interest paid or accrued;
(2) The trustee is a bank, a savings and loan association, a credit union, or a depository financial services loan company, chartered, licensed, or supervised under federal or state law, whose accounts are insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration, or any agency of this State or any federal agency established for the purpose of insuring accounts in these financial institutions. The financial institution must actively make residential real estate mortgage loans in Hawaii;
(3) The assets of the trust shall be invested only in fully insured savings or time deposits. Funds held in the trust may be commingled for purposes of investment, but individual records shall be maintained by the trustee for each individual housing account holder that show all transactions in detail;
(4) The entire interest of an individual or married couple for whose benefit the trust is maintained shall be distributed to the individual or couple not later than one hundred twenty months after the date on which the first contribution is made to the trust;
(5) Except as provided in subsection (g), the trustee shall not distribute the funds in the account unless the trustee:
(A) Verifies that the money is to be used for the purchase of a first principal residence located in Hawaii, and provides that the instrument of payment is payable to the mortgagor, construction contractor, or other vendor of the property purchased; or
(B) Withholds an amount equal to ten per cent of the amount withdrawn from the account and remits this amount to the director within ten days after the date of the withdrawal. The amount withheld shall be applied to the liability of the taxpayer under subsections (c) and (e); and
(6) If any amounts are distributed before the expiration of three hundred sixty-five days from the date on which a contribution is made to the account, the trustee shall so notify in writing the taxpayer and the director. If the trustee makes the verification required in paragraph (5)(A), then the department shall disallow the deduction under subsection (a) and subsections (c), (e), and (f) shall not apply to that amount. If the trustee withholds an amount under paragraph (5)(B), then the department shall disallow the deduction under subsection (a) and subsection (e) shall apply, but subsection (c) shall not apply."
2. By amending subsections (f) and (g) to read:
"(f) If the individual for whose benefit the
individual housing account was established purchases a residential property in
Hawaii with the distribution from the individual housing account[:
(1) Before January
1, 1990, and if the individual sells in any manner or method or by use of any
instrument conveying or transferring the residential property, the gross income
of the individual under this chapter for the taxable year in which the
residential property is sold, conveyed, or transferred, whichever is
applicable, shall include an amount equal to the amount of the distribution
from the individual housing account, and in addition, the gross income of the
individual shall be increased by an amount equal to ten per cent of the total
distribution from the individual housing account; or
(2) After December
31, 1989], the individual shall report one-tenth of the total distribution
from the individual housing account used to purchase the residential property
as gross income in the taxable year in which the distribution is completed and
in each taxable year thereafter until all of the distribution has been included
in the individual's gross income at the end of the tenth taxable year after the
purchase of the residential property. If
the individual sells in any manner or method or by use of any instrument
conveying or transferring the residential property, the gross income of the
individual under this chapter for the taxable year in which the residential
property is sold, conveyed, or transferred, whichever is applicable, shall
include an amount equal to the amount of the distribution from the individual
housing account not previously reported as gross income, and in addition, the
tax liability of the individual shall be increased by an amount equal to ten
per cent of the total distribution from the individual housing account. If the individual sells the residential
property in any manner as provided in this paragraph after all of the distribution
has been included in the individual's gross income at the end of the tenth
taxable year after the purchase of the residential property, the tax liability
of the individual shall not be increased by an amount equal to ten per cent of
the total distribution from the individual housing account.
[An individual who purchased a residential
property in Hawaii with the distribution from an individual housing account
before January 1, 1990, who is subject to paragraph (1) may elect to report as
provided in paragraph (2). The election
shall be made before January 1, 1991. If
the individual makes the election, the individual shall report one-tenth of the
total distribution from the individual housing account as gross income in the
taxable year in which the election occurs and in each taxable year thereafter
until all of the distribution has been included in gross income as provided by
paragraph (2). If the individual making
the election sells the residential property in any manner as provided in
paragraph (2), then the individual shall include as income the amount of the
distribution not previously reported as income and increase the individual's
tax liability as provided in the second sentence of paragraph (2), except when
the third sentence of paragraph (2) applies.
In the alternative, any individual
subject to paragraph (2) who established the individual housing account before
January 1, 1990, may elect within one year after the date of purchase, to be
subject to paragraph (1).]
(g) No tax liability shall be imposed under this section if:
(1) The payment or distribution is attributable to the individual dying or becoming totally disabled; or
(2) Residential property subject to subsection (f) is transferred by will or by operation of law or sold due to the death or total disability of an individual or individual's spouse,
subject to the following:
An individual shall not be
considered to be totally disabled unless proof is furnished of the total
disability [in the form and manner as the director may require.] as
defined in section 235-1.
Upon the death of an individual for whose benefit an individual housing account has been established, the funds in the account shall be payable to the estate of the individual; provided that if the account was held jointly by the decedent and a spouse of the decedent, the account shall terminate and be paid to the surviving spouse; or, if the surviving spouse so elects, the spouse may continue the account as an individual housing account. Upon the total disability of an individual for whose benefit an individual housing account has been established, the individual or the individual's authorized representative may elect to continue the account or terminate the account and be paid the assets; provided that if the account was held jointly by a totally disabled person and a spouse of that person, then the spouse or an authorized representative may elect to continue the account or terminate the account and be paid the assets."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on June 30, 3000.
Report Title:
Individual Housing Account; Contribution Level; Maximum Account Level
Description:
Amends the individual housing account laws to increase the contribution levels and maximum account levels. Effective 6/30/3000. (HD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.