Payments to an Individual Housing Account (IHA) may be deductible from your gross income under Hawaii state tax rules. For the taxable year, you may deduct up to $5,000 in cash payments made into a trust account established for saving toward a down payment on your first principal residence. If you are married and filing a joint return, the combined deduction limit is $10,000. However, no deduction is allowed for any amounts distributed from the account less than 365 days after the payment was made.
Eligibility and Limitations
- Deduction is limited to $5,000 per individual ($10,000 for married couples filing jointly).
- Payments must be made in cash during the taxable year.
- The trust account must be established as a Qualified Individual Housing Account to pay eligible acquisition costs of the taxpayer's first principal residence.
- If amounts deducted are distributed from the account within 365 days after the date of payment (other than for a qualified purpose or another exception provided by law), the previously deducted amount may be required to be included in Hawaii gross income.
Tax Rule Reference
The deduction for contributions to a Qualified Individual Housing Account is explained in the Form N-11 Instructions, Line 16. The eligibility requirements, deduction limits, and recapture rules are determined under the applicable Hawaii law and the Form N-11 instructions.
Source:
Form N-11
Disclaimer: Always verify details with the current year’s Hawaii Department of Taxation forms and instructions. This information is for general guidance and does not constitute personalized tax advice. Consult a CPA or tax professional for specific situations.