HB 740 Summary

• Requires real estate investment trusts (REITs) to file annual returns reporting gross income, deductions, shareholder information, and income attributable to Hawaii for taxable years beginning after December 31, 2019.

• Mandates REITs to withhold and remit taxes to Hawaii based on each nonresident shareholder's pro rata share of Hawaii-source income, using the highest marginal tax rate (4.4%, 5.4%, or 6.4%) if shareholder agreements are not timely filed.

• Eliminates the dividend paid deduction for REITs for taxable years beginning after December 31, 2019, except for dividends attributable to affordable housing at or below 100% of median family income.

• Permits REITs to file composite returns and make composite tax payments on behalf of nonresident shareholders, and requires nonresident shareholders to agree to file returns and submit to Hawaii jurisdiction.

• Directs all revenue collected from REIT taxation to the qualified returning resident down payment program special fund established under section 201H.