Bill Text: HI SB1462 | 2025 | Regular Session | Amended
Bill Title: Relating To A State Historic Preservation Income Tax Credit.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2025-03-04 - Received from Senate (Sen. Com. No. 346) in amended form (SD 1). [SB1462 Detail]
Download: Hawaii-2025-SB1462-Amended.html
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THE SENATE |
S.B. NO. |
1462 |
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THIRTY-THIRD LEGISLATURE, 2025 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO A STATE HISTORIC PRESERVATION INCOME TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 235,
Hawaii Revised Statutes, is amended by adding to part VI a new section to be
appropriately designated and to
read as follows:
"§235- Historic preservation income tax credit. (a) Notwithstanding any law to the contrary, there shall be allowed to each taxpayer subject to the tax imposed by this chapter a historic preservation income tax credit for substantial rehabilitation of a certified historic structure, which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the tax credit is properly claimed.
(b)
In the case of a partnership, S corporation, estate, trust, or any
developer of a rehabilitated certified historic structure, the tax credit
allowable shall be as provided under subsection (d) for the taxable year. The cost upon which the credit is computed
shall be determined at the entity level and the distribution and share of the
tax credit shall be determined pursuant to section 704(b) of the Internal
Revenue Code.
If a deduction is taken under section
179 (with respect to election to expense certain depreciable business assets)
of the Internal Revenue Code, no tax credit shall be allowed for that portion
of the qualified expense for which the deduction is taken.
The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat
the amount of the credit allowable and claimed as a taxable income item for the
taxable year in which it is properly recognized under the method of accounting
used to compute taxable income.
(c)
The amount of a historic preservation income tax credit that is
certified by qualified staff of the state historic preservation division of the
department of land and natural resources shall be thirty per cent of the
qualified rehabilitation expenditures.
(d)
The tax credit allowed under this section shall be available in the
taxable year in which the substantially rehabilitated certified historic
structure is placed into service. In the
case of projects completed in phases, the tax credit shall be prorated to the
substantially rehabilitated identifiable portion of the certified historic
structure placed into service during that taxable year.
(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 either
the credit is exhausted, or for a period of ten years, whichever is earlier.
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)
The department of land and natural resources shall adopt rules pursuant
to chapter 91 establishing standards and criteria for the approval of
rehabilitation of certified historic structures for which the tax credit under
this section is sought. These standards
and criteria shall take into account whether the rehabilitation of a certified
historic structure will preserve the historic character of the building.
(g)
Following the completion of rehabilitation of a certified historic
structure:
(1) The taxpayer shall notify the state historic preservation division that the rehabilitation has been completed and shall provide the state historic preservation division with documentation and certification of the costs incurred in rehabilitating the historic structure;
(2) Qualified staff of the state historic preservation division shall review the rehabilitation and verify the rehabilitation project's compliance with the rehabilitation plan;
(3) Upon each determination made under this subsection, the state historic preservation division shall issue a certificate to the taxpayer verifying that the rehabilitation has been completed in accordance with the approved rehabilitation plan; and
(4) The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation.
The department of land and natural
resources may offset the costs of certifying tax credit claims under this
section by assessing and collecting a fee, which shall be deposited into the
Hawaii historic preservation special fund established under section 6E-16.
(h)
The director of taxation:
(1) Shall prepare any forms that may be necessary to claim the tax credit under this section;
(2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section; and
(3) May adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this section.
(i)
The aggregate amount of the tax credits claimed for qualified
rehabilitation projects shall not exceed:
(1) $1,000,000 for the 2025 taxable year;
(2) $1,000,000 for the 2026 taxable year;
(3) $1,000,000 for the 2027 taxable year;
(4) $1,000,000 for the 2028 taxable year;
(5) $1,000,000 for the 2029 taxable year; and
(6) $1,000,000 for the 2030 taxable year.
(j)
Each taxpayer claiming a tax credit under this section, no later than
the last day of the twelfth month following the close of the taxable year in
which qualified costs were expended, shall submit a written, certified
statement to the state historic preservation division containing the qualified
rehabilitation expenditures incurred by the taxpayer and any other information
the state historic preservation division or department of taxation may require.
Any taxpayer failing to submit
information to the state historic preservation division in a manner prescribed
by the department of land and natural resources prior to the last day of the
twelfth month following the close of the tax year in which qualified costs were
expended shall not be eligible to receive the tax credit for those expenses,
and any credit already claimed for that taxable year shall be recaptured in
total. The amount of the recaptured tax
credit shall be added to the taxpayer's tax liability for the taxable year in
which the recapture occurs.
All information in the statement
submitted under this section shall be a public document, except for information
that is otherwise exempt from public disclosure in accordance with chapter 92F.
(k)
Recapture of a previously claimed tax credit shall be required from any
taxpayer who received a credit under this section if any of the following
occur:
(1) The projected qualified expenditures do not materialize; or
(2) The rehabilitation of the certified historic structure does not proceed in a timely manner and in accordance with the approved rehabilitation plan.
Any credit under this section shall be
recaptured following the close of the taxable year for which the credit is
claimed if the department of land and natural resources notifies the department
of taxation that the taxpayer has failed to comply with this section or rules
adopted thereunder.
(l)
The state historic preservation division, in consultation with the
department of taxation, shall determine the information necessary to enable a
quantitative and qualitative assessment of the outcomes of the tax credit and
submit a report to the legislature evaluating the effectiveness of the tax
credit no later than twenty days prior to the convening of each regular
legislative session. The report shall
include findings and recommendations to improve the effectiveness of the tax
credit in order to further encourage the rehabilitation of historic properties.
(m)
For the purposes of this section:
"Certified historic structure"
means any structure that is:
(1) Individually listed in the Hawaii register of historic places or the national register of historic places;
(2) Located in a historic district that is listed in the Hawaii register of historic places or the national register of historic places, and certified by the state historic preservation division as contributing to the significance of the historic district; or
(3) A structure that the state historic preservation division has determined to be eligible for inclusion in the Hawaii register of historic places, and that is subsequently listed in the Hawaii register of historic places by the date of certification by the administrator of the state historic preservation division in accordance with subsection (g).
"Qualified rehabilitation
expenditures" means any costs incurred for the physical rehabilitation,
renovation, or construction of a certified historic structure pursuant to a
rehabilitation plan; provided that the term shall not include the taxpayer's
personal labor.
"Qualified staff" means a
staff person meeting the Secretary of the Interior's Historic Preservation
Professional Qualification Standards for an architectural historian or historic
architect.
"Rehabilitation plan" means
any construction plans and specifications for the proposed rehabilitation of a
historic structure in sufficient detail for evaluation of compliance with the
rules adopted by the department of land and natural resources.
"Substantial rehabilitation" means that the qualified rehabilitation expenditures on a certified historic structure exceed twenty-five per cent of the assessed value of the structure."
SECTION 2. New statutory material is underscored.
SECTION 3. This Act shall take effect on July 1, 2050, and shall:
(1) Apply to taxable years beginning after December 31, 2024; and
(2) Be repealed on December 31, 2030.
Report Title:
DOTAX; DLNR; State Historic Preservation Division; Historic Preservation Income Tax Credit
Description:
Reenacts the Historic Preservation Income Tax Credit. Establishes an annual cap amount on the tax credit of $1,000,000. Effective 7/1/2050. Sunsets 12/31/2030. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
