N-325: Historic Preservation Income Tax Credit (Revision 2024)

Who files this form

Use Form N-325 to claim the Hawaii historic preservation income tax credit on Form N-11, N-15, N-20, N-30, N-35, N-40, or N-70NP.

The form covers certified credits, credits received from other entities, unused credits carried over from prior years, and credit recapture. Flow-through entities use Part IV to report credits allocated to partners, shareholders, or beneficiaries.

What you'll need

Have the following ready, as applicable:

• Your tax return name and SSN or FEIN.
• The credit certificate in Part I, completed by the Historic Preservation Division, showing the certified credit amount.
• Schedule K-1 from Form N-20, N-35, or N-40, or federal Form 1099-PATR, for credits received from another entity. You will also need that entity's name and federal employer identification number.
• Your unused credit carryover from the prior tax year and adjusted tax liability from your current return.
• Schedule CR to report the new credit, credit applied, and unused carryover.
• For allocations in Part IV, each recipient's name, address, identifying number, and allocated credit amount. Attach additional sheets if needed.

How to file

Attach Form N-325 to Form N-11, N-15, N-20, N-30, N-35, N-40, or N-70NP.

In Part II, enter your certified credit and any credit received from other entities. Add any prior-year carryover, then follow the lines to calculate the credit you can apply and the amount left to carry over. Report the indicated amounts on Schedule CR.

Form N-20 and N-35 filers must transfer Part II, line 3 to the appropriate lines of their return's Schedule K, skip lines 4 through 10, and continue to Parts III and IV. Form N-40 filers are directed to the instructions, which are not included in the supplied text.

Use Part III for recapture and Part IV for allocations to partners, shareholders, or beneficiaries, as applicable.

Common mistakes

• Do not complete the Historic Preservation Division certificate yourself. Part I is for the division to complete only.
• If you are claiming only a distributed credit from a partnership, S corporation, estate, or trust, skip Part II, line 1 and begin on line 2.
• Form N-20 and N-35 filers should not complete Part II, lines 4 through 10. Follow the form's Schedule K directions instead.
• If you claim other nonrefundable credits, line 7 directs you to a worksheet on page 2 of the instructions. If you claim none, enter zero.
• Remember to enter the amounts from Part II, lines 3 and 9 in the appropriate columns of Schedule CR, and enter line 10 in column (d) if it is more than zero.

Questions people ask

Who certifies the credit?

The Historic Preservation Division completes Part I. The certificate includes qualified rehabilitation expenditures, the credit allowed for the tax year, and the certifying officer's signature.

How much credit can I apply this year?

Part II, line 9 uses the smaller of your tentative current-year credit on line 5 or your remaining tax liability on line 8.

Can I carry unused credit forward?

Yes. The form states that unused credit may be carried over and used against tax liability in subsequent years until exhausted.

How does the form handle recapture?

Part III compares the credit requiring recapture with your prior-year carryover. If the recapture credit amount is larger, add the difference, rounded to the nearest dollar, to your tax liability for the year recapture occurs. If the carryover is larger, the difference is your adjusted carryover.

Official sources

• https://files.hawaii.gov/tax/forms/current/n325_i.pdf