| 47 | | - | SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§235- Disposition of real property to owner-occupant tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed under this chapter, a disposition of real property to owner-occupant preservation tax credit that 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 shall be determined at the entity level. Distribution and share of credit shall be determined by rule. (c) The disposition of real property to owner-occupant tax credit shall be equal to per cent of the amount realized on the disposition of real property from a taxpayer, acting as a transferor, to a qualified transferee, up to a maximum of $ . (d) The total amount of tax credits allowed under this section shall not exceed $ for all taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $ cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year. (e) 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. (f) If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of credit over liability may be used as a tax credit against the taxpayer's net 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. (g) Failure of the qualified transferee to use the real property that is being used to claim the credit under this section as an owner-occupant shall result the taxpayer's ineligibility and a recapture of the credit. 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. (h) This section shall not apply to taxable years beginning after December 31, 2028. (i) As used in this section: "Owner-occupant" means any individual in whose name sole or joint legal title is held in real property that, simultaneous to such ownership, serves as the individual's principal residence, as defined by the department, for a period of not less than three hundred sixty-five consecutive days; provided that the individual shall retain complete possessory control of the premises of the real property during this period. An individual shall not be deemed to have complete possessory control of the premises if the individual rents, leases, or assigns the premises for any period of time to any other person in whose name legal title is not held; except that an individual shall be deemed to have complete possessory control even when the individual conveys or transfers the real property into a trust for estate planning purposes and continues in the use of the premises as the individual's principal residence during this period. "Property" or "real property" has the meaning as the same term is defined in section 231-1. "Qualified transferee" means any person acquiring real property that is located in Hawaii for the purpose of using the property as an owner-occupant. "Transferor" means any person disposing of real property that is located in Hawaii." SECTION 2. New statutory material is underscored. SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023; provided that this Act shall be repealed on December 31, 2028. |
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| 47 | + | SECTION 1. Section 235-68, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows: "(a) As used in this section: "Nonresident person" means every person other than a resident person. "Property" or "real property" has the meaning as the same term is defined in section 231-1. "Resident person" means any: (1) Individual included in the definition of resident in section 235-1; (2) Corporation incorporated or granted a certificate of authority under chapter 414, 414D, or 415A; (3) Partnership formed or registered under chapter 425 or 425E; (4) Foreign partnership qualified to transact business pursuant to chapter 425 or 425E; (5) Limited liability company formed under chapter 428 or any foreign limited liability company registered under chapter 428; provided that if a single member limited liability company has not elected to be taxed as a corporation, the single member limited liability company shall be disregarded for purposes of this section and this section shall be applied as if the sole member is the transferor; (6) Limited liability partnership formed under chapter 425; (7) Foreign limited liability partnership qualified to transact business under chapter 425; (8) Trust included in the definition of resident trust in section 235-1; or (9) Estate included in the definition of resident estate in section 235-1. "Residential real property" means fee simple or leasehold real property upon which is situated: (1) From one to four dwelling units; or (2) A residential condominium or cooperative apartment, the primary use of which is occupancy as a residence by any natural person or persons, regardless of whether the property owner resides on the property. "Transferee" means any person, the State and the counties and their respective subdivisions, agencies, authorities, and boards, acquiring real property which is located in Hawaii. "Transferor" means any person disposing real property that is located in Hawaii. (b) Unless otherwise provided in this section, every transferee shall deduct and withhold a tax equal to 7.25 per cent of the amount realized on the disposition of Hawaii real property[.]; provided that, if the real property being disposed of is residential real property, the transferee shall instead deduct and withhold a tax equal to seventy-five per cent of the amount realized on the disposition of the Hawaii real property. Every person required to withhold a tax under this section is made liable for the tax and is relieved of liability for or upon the claim or demand of any other person for the amount of any payments to the department made in accordance with this section." SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 3. This Act, upon its approval, shall apply to real estate dispositions that occur on or after September 15, 2023. INTRODUCED BY: _____________________________ |
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| 53 | | - | (b) In the case of a partnership, S corporation, estate, or trust, the tax credit shall be determined at the entity level. Distribution and share of credit shall be determined by rule. |
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| 54 | | - | |
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| 55 | | - | (c) The disposition of real property to owner-occupant tax credit shall be equal to per cent of the amount realized on the disposition of real property from a taxpayer, acting as a transferor, to a qualified transferee, up to a maximum of $ . |
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| 56 | | - | |
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| 57 | | - | (d) The total amount of tax credits allowed under this section shall not exceed $ for all taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $ cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year. |
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| 58 | | - | |
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| 59 | | - | (e) The director of taxation: |
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| 60 | | - | |
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| 61 | | - | (1) Shall prepare any forms that may be necessary to claim a tax credit under this section; |
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| 62 | | - | |
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| 63 | | - | (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 |
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| 64 | | - | |
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| 65 | | - | (3) May adopt rules under chapter 91 necessary to effectuate the purposes of this section. |
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| 66 | | - | |
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| 67 | | - | (f) If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of credit over liability may be used as a tax credit against the taxpayer's net income tax liability in subsequent years until exhausted. |
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| 68 | | - | |
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| 69 | | - | 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. |
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| 70 | | - | |
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| 71 | | - | (g) Failure of the qualified transferee to use the real property that is being used to claim the credit under this section as an owner-occupant shall result the taxpayer's ineligibility and a recapture of the credit. 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. |
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| 72 | | - | |
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| 73 | | - | (h) This section shall not apply to taxable years beginning after December 31, 2028. |
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| 74 | | - | |
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| 75 | | - | (i) As used in this section: |
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| 76 | | - | |
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| 77 | | - | "Owner-occupant" means any individual in whose name sole or joint legal title is held in real property that, simultaneous to such ownership, serves as the individual's principal residence, as defined by the department, for a period of not less than three hundred sixty-five consecutive days; provided that the individual shall retain complete possessory control of the premises of the real property during this period. An individual shall not be deemed to have complete possessory control of the premises if the individual rents, leases, or assigns the premises for any period of time to any other person in whose name legal title is not held; except that an individual shall be deemed to have complete possessory control even when the individual conveys or transfers the real property into a trust for estate planning purposes and continues in the use of the premises as the individual's principal residence during this period. |
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| 53 | + | "Nonresident person" means every person other than a resident person. |
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| 87 | | - | SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023; provided that this Act shall be repealed on December 31, 2028. |
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| 63 | + | (3) Partnership formed or registered under chapter 425 or 425E; |
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| 64 | + | |
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| 65 | + | (4) Foreign partnership qualified to transact business pursuant to chapter 425 or 425E; |
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| 66 | + | |
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| 67 | + | (5) Limited liability company formed under chapter 428 or any foreign limited liability company registered under chapter 428; provided that if a single member limited liability company has not elected to be taxed as a corporation, the single member limited liability company shall be disregarded for purposes of this section and this section shall be applied as if the sole member is the transferor; |
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| 68 | + | |
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| 69 | + | (6) Limited liability partnership formed under chapter 425; |
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| 70 | + | |
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| 71 | + | (7) Foreign limited liability partnership qualified to transact business under chapter 425; |
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| 72 | + | |
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| 73 | + | (8) Trust included in the definition of resident trust in section 235-1; or |
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| 74 | + | |
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| 75 | + | (9) Estate included in the definition of resident estate in section 235-1. |
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| 76 | + | |
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| 77 | + | "Residential real property" means fee simple or leasehold real property upon which is situated: |
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| 78 | + | |
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| 79 | + | (1) From one to four dwelling units; or |
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| 80 | + | |
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| 81 | + | (2) A residential condominium or cooperative apartment, |
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| 82 | + | |
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| 83 | + | the primary use of which is occupancy as a residence by any natural person or persons, regardless of whether the property owner resides on the property. |
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| 84 | + | |
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| 85 | + | "Transferee" means any person, the State and the counties and their respective subdivisions, agencies, authorities, and boards, acquiring real property which is located in Hawaii. |
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| 86 | + | |
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| 87 | + | "Transferor" means any person disposing real property that is located in Hawaii. |
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| 88 | + | |
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| 89 | + | (b) Unless otherwise provided in this section, every transferee shall deduct and withhold a tax equal to 7.25 per cent of the amount realized on the disposition of Hawaii real property[.]; provided that, if the real property being disposed of is residential real property, the transferee shall instead deduct and withhold a tax equal to seventy-five per cent of the amount realized on the disposition of the Hawaii real property. |
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| 90 | + | |
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| 91 | + | Every person required to withhold a tax under this section is made liable for the tax and is relieved of liability for or upon the claim or demand of any other person for the amount of any payments to the department made in accordance with this section." |
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| 92 | + | |
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| 93 | + | SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. |
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| 94 | + | |
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| 95 | + | SECTION 3. This Act, upon its approval, shall apply to real estate dispositions that occur on or after September 15, 2023. |
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