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HB1143
HOUSE OF REPRESENTATIVES
H.B. NO.
1143
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
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:
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SECTION 1.
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Chapter 235,
Hawaii Revised Statutes, is amended by adding to part VI a new section to be
appropriately designated and
to
read as follows:
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�235-
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Historic
preservation income tax credit.
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(a)
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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.
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(b)
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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.
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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.
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If a deduction is taken under section
179 (with respect to election to expense 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.
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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.
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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.
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(c)
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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.
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(d)
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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.
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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.
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(e)
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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.
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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.
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Failure to comply with the
foregoing provision shall constitute a waiver of the right to claim the credit.
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(f)
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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.
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These standards and criteria shall take into
account whether the rehabilitation of a certified historic structure will
preserve the historic character of the building.
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(g)
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Following the completion of rehabilitation of
a certified historic structure:
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(1)
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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;
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(2)
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Qualified
staff of the state historic preservation division shall review the
rehabilitation and verify the rehabilitation project's compliance with the
rehabilitation plan;
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(3)
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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
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(4)
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The
taxpayer shall file the certificate with the taxpayer's tax return with the
department.
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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.
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(h)
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The director shall prepare any forms that may
be necessary to claim the tax credit under this section.
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The director may also require the taxpayer to
furnish reasonable information to ascertain the validity of the claim for
credit made under this section and may adopt rules necessary to effectuate the
purposes of this section pursuant to chapter 91.
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(i)
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The aggregate amount of the tax credits
claimed for qualified rehabilitation projects shall not exceed:
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(1)
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$1,000,000
for the 2025 taxable year;
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(2)
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$1,000,000
for the 2026 taxable year;
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(3)
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$1,000,000
for the 2027 taxable year;
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(4)
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$1,000,000
for the 2028 taxable year;
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(5)
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$1,000,000
for the 2029 taxable year; and
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(6)
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$1,000,000
for the 2030 taxable year.
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(j)
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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 the
department may require.
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Any taxpayer failing to submit
information to the state historic preservation division in a manner prescribed
by the department of land and natural resources or the department, or both,
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.
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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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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.
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(k)
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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:
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(1)
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The
projected qualified expenditures do not materialize; or
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(2)
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The
rehabilitation of the certified historic structure does not proceed in a timely
manner and in accordance with the approved rehabilitation plan.
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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
that the taxpayer has failed to comply with this section or rules adopted
thereunder.
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(l)
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The state historic preservation division, in
consultation with the department, 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.
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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.
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(m)
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For the purposes of this section:
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"Certified historic structure"
means any structure that is:
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(1)
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Individually
listed in the Hawaii register of historic places or the national register of
historic places;
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(2)
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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
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(3)
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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).
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"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.
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"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.
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"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.
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"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.
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SECTION 2.
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New statutory material is underscored.
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SECTION
3.
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This Act, upon its approval,
shall apply to taxable years beginning after December 31, 2024, and shall be
repealed on December 31, 2030.
INTRODUCED BY:
_____________________________
BY REQUEST
Report Title:
Department of Land and Natural Resources; State Historic
Preservation Division; Tax Credit
Description:
Reenacts the Historic Preservation Income Tax Credit,
establishes a cap of the tax credit at $1,000,000, for taxable year 2025 to
taxable year 2030, respectively, and repeals the tax credit on December 31,
2030.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.