§235-110.8  Low-income housing tax credit. (a)  Section 42 (with respect to low-income housing credit) of the InternalRevenue Code shall be operative for the purposes of this chapter as provided inthis section.

(b)  Each taxpayer subject to the tax imposedby this chapter, who has filed [a] net income tax return for a taxable year mayclaim a low-income housing tax credit against the taxpayer's net income taxliability.  The amount of the credit shall be deductible from the taxpayer'snet income tax liability, if any, imposed by this chapter for the taxable yearin which the credit is properly claimed on a timely basis.  A credit under thissection may be claimed whether or not the taxpayer claims a federal low-incomehousing tax credit pursuant to section 42 of the Internal Revenue Code.

(c)  The low-income housing tax credit shall befifty per cent of the applicable percentage of the qualified basis of eachbuilding located in Hawaii.  The applicable percentage shall be calculated asprovided in section 42(b) of the Internal Revenue Code.

(d)  For the purposes of this section, thedetermination of:

(1)  Qualified basis and qualified low-income buildingshall be made under section 42(c);

(2)  Eligible basis shall be made under section 42(d);

(3)  Qualified low-income housing project shall bemade under section 42(g);

(4)  Recapture of credit shall be made under section42(j), except that the tax for the taxable year shall be increased undersection 42(j)(1) only with respect to credits that were used to reduce stateincome taxes;

(5)  Application of at-risk rules shall be made undersection 42(k);

of the Internal Revenue Code.

(e)  As provided in section 42(e),rehabilitation expenditures shall be treated as separate new building and theirtreatment under this section shall be the same as in section 42(e).  Thedefinitions and special rules relating to credit period in section 42(f) andthe definitions and special rules in section 42(i) shall be operative for thepurposes of this section.

(f)  The state housing credit ceiling undersection 42(h) shall be zero for the calendar year immediately following theexpiration of the federal low-income housing tax credit program and for anycalendar year thereafter, except for the carryover of any credit ceiling amountfor certain projects in progress which, at the time of the federal expiration,meet the requirements of section 42.

(g)  The credit allowed under this sectionshall be claimed against net income tax liability for the taxable year.  Forthe purpose of deducting this tax credit, net income tax liability means netincome tax liability reduced by all other credits allowed the taxpayer underthis chapter.

A tax credit under this section which exceedsthe taxpayer's income tax liability may be used as a credit against thetaxpayer's income tax liability in subsequent years until exhausted.  Allclaims for a tax credit under this section must be filed on or before the endof the twelfth month following the close of the taxable year for which thecredit may be claimed.  Failure to properly and timely claim the credit shallconstitute a waiver of the right to claim the credit.  A taxpayer may claim acredit under this section only if the building or project is a qualifiedlow-income housing building or a qualified low-income housing project undersection 42 of the Internal Revenue Code.

Section 469 (with respect to passive activitylosses and credits limited) of the Internal Revenue Code shall be applied inclaiming the credit under this section.

(h)  The director of taxation may adopt anyrules under chapter 91 and forms necessary to carry out this section. [L 1988,c 216, §1; am L 1989, c 13, §6; am L 2000, c 148, §3; am L 2005, c 196, §8]