DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2001-20
November 6, 2001
RE: Act 10, Third Special Session Laws of Hawaii 2001 (Act 10), Relating to Income Tax Credits
Act 10 provides a new nonrefundable residential construction and remodeling income tax credit for four percent of the construction or renovation costs incurred before July 1, 2002, up to a maximum of $250,000 in the aggregate for each unit; and amends the existing hotel construction and remodeling income tax credit for qualified hotel facilities.
Residential construction and remodeling tax credit
This new nonrefundable four percent credit is applicable to:
The credit must be claimed by the taxpayer on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. A taxpayer claiming the credit may reduce the basis of property by the amount of the credit allowable or treat the credit as taxable income.
Hotel construction and remodeling tax credit. 5
An income tax credit is available for "construction or renovation costs" 6 for a "qualified hotel facility" 7 of a taxpayer subject to the net income tax under chapter 235, HRS, and the transient accommodations tax under chapter 237D, HRS, including an association of apartment owners or timeshare association. The credit must be claimed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. A taxpayer claiming the credit may reduce the basis of property by the amount of the credit allowable or treat the credit as taxable income.
Act 10 temporarily changes the credit from a refundable four percent credit to a nonrefundable ten percent credit for costs incurred on or after November 2, 2001 through June 30, 2003. These changes to the construction and remodeling income credit will be repealed on June 30, 2003. The credit will then revert to the original four percent refundable credit and continue to be available in subsequent years, but not for taxable years beginning after December 31, 2005.
The Department will be revising and preparing new forms to claim these
credits. Current forms and other tax information are available at the Department's
website at: www.hawaii.gov/tax. On Oahu, forms may be
ordered by calling the Department's Forms Request Line at: 587-7572.
Persons who are not calling from Oahu, may call: 1-800-222-7572 (toll-free)
to receive forms by mail or by fax.
MARIE Y. OKAMURA
Director of Taxation
HRS Sections Explained: HRS Sections 235-__; 235-110.4.
VIEW AN ON-LINE COPY OF THE ACT (SB 8, SD2) ON THE CAPITOL WEBSITE
For official copies of acts, please contact:
Office of the Lieutenant Governor, State Capitol, 5th Floor, Honolulu 96813.
Phone: 586-0255, Monday - Friday, 7:45 am - 4:30 pm