H.B. 378 Summary

• Allows low-income housing tax credits to be allocated among partners or members of a taxpayer in any manner agreed to by the parties, regardless of federal tax partnership status, provided partners or members are admitted pursuant to state law on or before the tax return filing date.

• Permits taxpayers to claim state low-income housing tax credits without being eligible for federal credits under Internal Revenue Code Section 42.

• For buildings placed in service after December 31, 2020, exempts investors from federal passive activity loss limitations (IRC Sections 453, 465, and 469) and allows income/loss allocations based on written partner or member agreements.

• Caps state tax credits at 50 percent of federal credits for buildings placed in service after December 31, 2020, and ensures state depreciation basis does not exceed federal depreciation basis.

• Extends the effective date of Act 129, Session Laws of Hawaii 2016 from December 31, 2021 to December 31, 2027, maintaining enhanced low-income housing tax credit provisions for qualified buildings.