Kokua Line: Nontaxable income counts toward limit for property tax credit

Question: Regarding the low-income property tax credit (808ne.ws/715sa), what does the city count as income and how do they verify it?

Answer: The city counts the gross annual income of all the property’s titleholders, which cannot exceed $60,000 in total. Gross income includes all taxable and nontaxable income, according to the city. This would include wages; pensions and annuities; Social Security and SSI benefits; veteran’s disability benefits; business profits; IRA distributions; state tax refunds; interest and dividends; capital gains; and other types of income, according to the tax-credit application form, which you find at 808ne.ws/taxcreditapp.

To receive the 2020-2021 property tax credit, applicants must list the gross amount of all income received in 2018. Income- verification methods differ depending on whether an applicant filed a federal income tax return. Those who did must submit a 2018 Tax Return Transcript from the Internal Revenue Service, plus a W-2 form, if they received one.

Applicants who did not file federal income taxes must submit a Hawaii state tax return if they filed one, plus W-2, 1099s, Social Security benefit statements and/or other forms documenting their income.

As the story in Monday’s Honolulu Star-Advertiser said (808ne.ws/715sa), eligible Oahu owner-occupants have until Sept. 30 to apply for the credit, which does not renew automatically. There are other restrictions besides the combined income limit. The property must already have a home exemption, all titleholders must live there and they may not own any other property.

Fill out the application online, or pick one up at satellite city halls; the city Treasury Division, Room 115, at Honolulu Hale, 530 S. King St.; or the Tax Relief Section, Room 505, at 715 S. King St.

Call the Real Property Tax Relief Office at 768-3205 for more information.

Q: Will “home swaps” turn out to be a loophole in the new short-term rental law, because no money changes hands? I’m hearing people planning to call their rentals that, although I am not sure how they would disguise the income.

A: No, according to the city’s Department of Planning and Permitting. It says swaps such as those arranged on www.home exchange.com are covered by Ordinance 19-18, even without money changing hands. The department updated its FAQ about the short-term rental law last week, which you can read at 808ne.ws/vacfaq. On Page 5 its says, “Home exchanges are subject to the new regulations. While home exchanges may not involve cash transactions, owners are compensated for such exchanges with things like ‘guest points’ or (use of another) home/lodging. The definition of transient vacation unit contains a broad definition of compensation, i.e., ‘… compensation includes, but is not limited to, monetary payment, services or labor of transient occupants.’ The definition was intended to prevent people staying for less than 30 days in a dwelling or lodging unit, regardless of how the owner is compensated.”

Mahalo

My wife and I would like to thank a special couple for paying for our lunch at Anna Miller’s on June 20 around 2 p.m. We hope this couple will read this special thank you. My wife and I don’t know who this special couple are, but we were sitting waiting for our table and I was sitting with them just talking story. Then, after we had eaten and were waiting for our bill, our waitress told us that someone had already paid it. So to our surprise, the only people we could think of were the couple we sat with in the lobby. Mahalo nui loa and God bless. — Byron and Claudy

Write to Kokua Line at Honolulu Star-Advertiser, 7 Waterfront Plaza, Suite 210, 500 Ala Moana Blvd., Honolulu 96813; call 529-4773; fax 529-4750; or email kokualine@staradvertiser.com.