HI HB740

Requires real estate investment trusts (REITs) to file annual tax returns reporting gross income, deductions, shareholder information, income attributable to Hawaii, distributions, and dividends paid.

Mandates REITs to withhold and remit taxes to Hawaii based on the pro rata share of income attributable to the state, with nonresident shareholders required to file agreements consenting to file returns and submit to Hawaii's jurisdiction.

Eliminates the federal dividends paid deduction for REITs under Hawaii tax law for taxable years beginning after December 31, 2019, except for dividends from trust-owned affordable housing at or below 100% of median family income.

Allows REITs that fail to file required shareholder agreements to make composite tax payments on behalf of nonresident shareholders at the highest marginal tax rate (4.4% to 6.4% depending on income level).

Directs all revenue collected from REIT taxation to fund the qualified returning resident down payment program and takes effect July 1, 2019 for taxable years beginning after December 31, 2019.