Bill Text: HI SB189 | 2010 | Regular Session | Introduced
Bill Title: Gross Income Deductions; Individual Housing Account; Limits
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced - Dead) 2009-05-11 - Carried over to 2010 Regular Session. [SB189 Detail]
Download: Hawaii-2010-SB189-Introduced.html
Report Title:
Gross Income Deductions; Individual Housing Account; Limits
Description:
Increases the allowable annual and lifetime deductions from gross income for a taxpayer's contribution to their individual housing account.
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THE SENATE |
S.B. NO. |
189 |
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TWENTY-FIFTH LEGISLATURE, 2009 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO TAXATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-5.5, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) There shall be allowed as a
deduction from gross income the amount, not to exceed [$5,000,] $10,000,
paid in cash during the taxable year by an individual taxpayer to an individual
housing account established for the individual's benefit to provide funding for
the purchase of the individual's first principal residence. A deduction not to
exceed [$10,000] $20,000 shall be allowed for a married couple
filing a joint return. No deduction shall be allowed on any amounts distributed
less than three hundred sixty-five days from the date on which a contribution
is made to the account. Any deduction claimed for a previous taxable year for
amounts distributed less than three hundred sixty-five days from the date on
which a contribution was made shall be disallowed and the amount deducted shall
be included in the previous taxable year's gross income and the tax
reassessed. The interest paid or accrued within the taxable year on the
account shall not be included in the individual's gross income. For purposes
of this section, the term "first principal residence" means a
residential property purchased with the payment or distribution from the
individual housing account which shall be owned and occupied as the only home
by an individual who did not have any interest in, individually, or whose
spouse did not have any interest in, if the individual is married, a
residential property within the last five years of opening the individual
housing account.
In the case of a married couple filing separate
returns, the sum of the deductions allowable to each of them for the taxable
year shall not exceed [$5,000,] $10,000, or [$10,000] $20,000
for a joint return, for amounts paid in cash, excluding interest paid or
accrued thereon.
The amounts paid in cash allowable as a
deduction under this section to an individual for all taxable years shall not
exceed [$25,000,] $100,000, excluding interest paid or accrued.
In the case of married individuals having separate individual housing accounts,
the sum of the separate accounts and the deduction under this section shall not
exceed [$25,000,] $100,000, excluding interest paid or accrued
thereon.
(b) For purposes of this section, the term "individual housing account" means a trust created or organized in Hawaii for the exclusive benefit of an individual, or, in the case of a married individual, for the exclusive benefit of the individual and spouse jointly, but only if the written governing instrument creating the trust meets the following requirements:
(1) Contributions shall not be accepted for the
taxable year in excess of [$5,000] $10,000 (or [$10,000] $20,000
in the case of a joint return) or in excess of [$25,000] $100,000
for all taxable years, exclusive of interest paid or accrued;
(2) The trustee is a bank, a savings and loan association, a credit union, or a depository financial services loan company, chartered, licensed, or supervised under federal or state law, whose accounts are insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration, or any agency of this State or any federal agency established for the purpose of insuring accounts in these financial institutions. The financial institution must actively make residential real estate mortgage loans in Hawaii;
(3) The assets of the trust shall be invested only in fully insured savings or time deposits. Funds held in the trust may be commingled for purposes of investment, but individual records shall be maintained by the trustee for each individual housing account holder which show all transactions in detail;
(4) The entire interest of an individual or married couple for whose benefit the trust is maintained shall be distributed to the individual or couple not later than one hundred twenty months after the date on which the first contribution is made to the trust;
(5) Except as provided in subsection (g), the trustee shall not distribute the funds in the account unless it:
(A) [verifies] Verifies that the
money is to be used for the purchase of a first principal residence located in Hawaii, and provides that the instrument of payment is payable to the mortgagor,
construction contractor, or other vendor of the property purchased; or
(B) [withholds] Withholds an
amount equal to ten per cent of the amount withdrawn from the account and
remits this amount to the director within ten days after the date of the
withdrawal. The amount so withheld shall be applied to the liability of the
taxpayer under subsections (c) and (e); and
(6) If any amounts are distributed before the expiration of three hundred sixty-five days from the date on which a contribution is made to the account, the trustee shall so notify in writing the taxpayer and the director. If the trustee makes the verification required in paragraph (5)(A), then the department shall disallow the deduction under subsection (a) and subsections (c), (e), and (f) shall not apply to that amount. If the trustee withholds an amount under paragraph (5)(B), then the department shall disallow the deduction under subsection (a) and subsection (e) shall apply, but subsection (c) shall not apply."
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 taxable years beginning after December 31, 2008.
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INTRODUCED BY: |
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