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Act 174 extends the residential construction and remodeling income tax credit (Credit) to costs incurred before July 1, 2003.

Act 10 of the Third Special Session of 2001 (Act 10), in part, enacted a new nonrefundable four percent residential construction and remodeling income tax credit. The Credit is applicable to a taxpayer who incurs construction or remodeling costs up to $250,000 per unit before July 1, 2002, for residential real property in taxable years beginning after December 31, 2000, but not to taxable years beginning after December 31, 2003. To further stimulate economic activity in the residential construction industry, Act 174 extends the Credit to costs incurred before July 1, 2003.

Other clarifying changes are also made to the original credit provisions to give the Department clearer guidance on the administration of the Credit, including a clarification of the definition of "construction and remodeling cost" that qualify for the Credit and the types of taxpayers that may claim the Credit (i.e., homeowner, developer, or lessee of residential real property).

Though Act 174 applies to taxable years beginning after December 31, 2001, the Department will administer the Credit consistent with Act 174 from the effective date of Act 10 (i.e., for costs incurred from January 1, 2001). Act 174 reflects the way the Department has been administering the law.

Further guidance is provided in Department of Taxation Tax Information Release No. 2002-03, dated June 28, 2002.

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.