Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.B. No. 2076, S.D. 2, entitled:

begs leave to report as follows:

The purpose of this bill is to allow, for the 2007 taxable year, a fee owner to exclude from taxable income 50 percent of the gain realized from the sale of the leased fee interest in a residential leasehold house lot or multi-family residential leasehold unit to the lessee of the house lot or unit. The exclusion may not exceed $75,000 in the aggregate for all taxpayers.

The Hawaii Association of Realtors supported the intent of this bill. The Hawaii Council of Associations of Apartment Owners, Monarch Properties, Inc., and Date Laau Community Association and Iolani Banyan Coop., did not support this measure. The Department of Taxation, Tax Foundation of Hawaii, and Hawaii Independent Condominium & Cooperative Owners offered comments.

Your Committees notes that many of the testifiers stated that although they did not support this measure in its current form, they were supportive of S.B. No. 2076, S.D. 1.

Accordingly, your Committee has amended this bill by:

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2076, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2076, S.D. 2, H.D. 1, and be referred to the Committee on Consumer Protection & Commerce.