HOUSE OF REPRESENTATIVES

H.B. NO.

2750

TWENTY-NINTH LEGISLATURE, 2018

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  Land is one of the State's most valuable resources.  The record number of visitors to Hawaii has had a major impact on the community's beaches, parks, trails, and wilderness areas.  Such a high volume of traffic and use cannot be sustained indefinitely without causing long-term damage to the land.  An increased steady stream of funding is needed to support the State's land conservation efforts and to address the constant stress placed upon the natural environment.

     Another one of Hawaii's most valuable resources is its workforce, which is facing a housing crisis as the cost of rental units climbs while incomes remain constant.  Some residents face possible homelessness because they are unable to secure or maintain affordable housing.  An increased steady stream of funding is needed to allow the State to encourage private and non-profit developers to develop rental housing for low-income, very low-income, and extremely low-income households.

     The legislature finds that a strengthened land conservation fund will allow the State to better protect and support Hawaii's long-term environmental sustainability.  The legislature further finds that a strengthened rental housing revolving fund will allow the State to support rental housing development and, specifically, the development of projects that allocate all or a portion of the project's units to low-income, very low-income, and extremely low-income households.

     The purpose of this Act is to amend the conveyance tax statute by amending the basis and rate of the tax, adding an exemption for certain conveyances of real property, and amending the allocation of conveyance taxes to the land conservation fund and the rental housing revolving fund.

     SECTION 2.  Section 247-2, Hawaii Revised Statutes, is amended to read as follows:

     "§247-2  Basis and rate of tax.  The tax imposed by section 247-1 shall be based on the actual and full consideration (whether cash or otherwise, including any promise, act, forbearance, property interest, value, gain, advantage, benefit, or profit), paid or to be paid for all transfers or conveyance of realty or any interest therein, that shall include any liens or encumbrances thereon at the time of sale, lease, sublease, assignment, transfer, or conveyance, and shall be at the following rates:

     (1)  Except as provided in paragraph (2):

          (A)  [Ten cents]          per $100 for properties with a value of less than $600,000;

          (B)  [Twenty cents]          per $100 for properties with a value of at least $600,000, but less than $1,000,000;

          (C)  [Thirty cents]          per $100 for properties with a value of at least $1,000,000, but less than $2,000,000;

          (D)  [Fifty cents]          per $100 for properties with a value of at least $2,000,000, but less than $4,000,000;

          (E)  [Seventy cents]          per $100 for properties with a value of at least $4,000,000, but less than $6,000,000;

          (F)  [Ninety cents]          per $100 for properties with a value of at least $6,000,000, but less than $10,000,000; and

          (G)  [One dollar]          per $100 for properties with a value of $10,000,000 or greater; and

     (2)  For the sale of a condominium or single family residence for which the purchaser is ineligible for a county homeowner's exemption on property tax:

          (A)  [Fifteen cents]          per $100 for properties with a value of less than $600,000;

          (B)  [Twenty-five cents]          per $100 for properties with a value of at least $600,000, but less than $1,000,000;

          (C)  [Forty cents]          per $100 for properties with a value of at least $1,000,000, but less than $2,000,000;

          (D)  [Sixty cents]          per $100 for properties with a value of at least $2,000,000, but less than $4,000,000;

          (E)  [Eighty-five cents]          per $100 for properties with a value of at least $4,000,000, but less than $6,000,000;

          (F)  [One dollar and ten cents]          per $100 for properties with a value of at least $6,000,000, but less than $10,000,000; and

          (G)  [One dollar and twenty-five cents]          per $100 for properties with a value of $10,000,000 or greater,

of [such] the actual and full consideration; provided that in the case of a lease or sublease, this chapter shall apply only to a lease or sublease whose full unexpired term is for a period of five years or more, and in those cases, including (where appropriate) those cases where the lease has been extended or amended, the tax in this chapter shall be based on the cash value of the lease rentals discounted to present day value and capitalized at the rate of six per cent, plus the actual and full consideration paid or to be paid for any and all improvements, if any, that shall include on-site as well as off-site improvements, applicable to the leased premises; and provided further that the tax imposed for each transaction shall be not less than $1."

     SECTION 3.  Section 247-3, Hawaii Revised Statutes, is amended to read as follows:

     "§247-3  Exemptions.  The tax imposed by section 247-1 shall not apply to:

     (1)  Any document or instrument that is executed prior to January 1, 1967;

     (2)  Any document or instrument that is given to secure a debt or obligation;

     (3)  Any document or instrument that only confirms or corrects a deed, lease, sublease, assignment, transfer, or conveyance previously recorded or filed;

     (4)  Any document or instrument between husband and wife, reciprocal beneficiaries, or parent and child, in which only a nominal consideration is paid;

     (5)  Any document or instrument in which there is a consideration of $100 or less paid or to be paid;

     (6)  Any document or instrument conveying real property that is executed pursuant to an agreement of sale, and where applicable, any assignment of the agreement of sale, or assignments thereof; provided that the taxes under this chapter have been fully paid upon the agreement of sale, and where applicable, upon such assignment or assignments of agreements of sale;

     (7)  Any deed, lease, sublease, assignment of lease, agreement of sale, assignment of agreement of sale, instrument or writing in which the United States or any agency or instrumentality thereof or the State or any agency, instrumentality, or governmental or political subdivision thereof are the only parties thereto;

     (8)  Any document or instrument executed pursuant to a tax sale conducted by the United States or any agency or instrumentality thereof or the State or any agency, instrumentality, or governmental or political subdivision thereof for delinquent taxes or assessments;

     (9)  Any document or instrument conveying real property to the United States or any agency or instrumentality thereof or the State or any agency, instrumentality, or governmental or political subdivision thereof pursuant to the threat of the exercise or the exercise of the power of eminent domain;

     (10) Any document or instrument that solely conveys or grants an easement or easements;

     (11) Any document or instrument whereby owners partition their property, whether by mutual agreement or judicial action; provided that the value of each owner's interest in the property after partition is equal in value to that owner's interest before partition;

     (12) Any document or instrument between marital partners or reciprocal beneficiaries who are parties to a divorce action or termination of reciprocal beneficiary relationship that is executed pursuant to an order of the court in the divorce action or termination of reciprocal beneficiary relationship;

     (13) Any document or instrument conveying real property from a testamentary trust to a beneficiary under the trust;

     (14) Any document or instrument conveying real property from a grantor to the grantor's revocable living trust, or from a grantor's revocable living trust to the grantor as beneficiary of the trust;

     (15) Any document or instrument conveying real property, or any interest therein, from an entity that is a party to a merger or consolidation under chapter 414, 414D, 415A, 421, 421C, 425, 425E, or 428 to the surviving or new entity;

     (16) Any document or instrument conveying real property, or any interest therein, from a dissolving limited partnership to its corporate general partner that owns, directly or indirectly, at least a ninety per cent interest in the partnership, determined by applying section 318 (with respect to constructive ownership of stock) of the federal Internal Revenue Code of 1986, as amended, to the constructive ownership of interests in the partnership; [and]

[[](17)[]]  Any document or instrument that conforms to the transfer on death deed as authorized under chapter 527[.]; and

     (18) Any document or instrument conveying real property subject to a government assistance program qualified by the Hawaii housing finance and development corporation and administered or operated by the State, the corporation, the United States, or any of their political subdivisions, agencies, or instrumentalities, corporate or otherwise, which may be used to effectuate housing development and acquisition for the provision of affordable housing for qualified persons in the State."

     SECTION 4.  Section 247-7, Hawaii Revised Statutes, is amended to read as follows:

     "§247-7  Disposition of taxes.  All taxes collected under this chapter shall be paid into the state treasury to the credit of the general fund of the State, to be used and expended for the purposes for which the general fund was created and exists by law; provided that of the taxes collected each fiscal year:

     (1)  [Ten] Fifteen per cent or [$6,800,000,] $10,500,000, whichever is less, shall be paid into the land conservation fund established pursuant to section 173A-5; and

     (2)  [Fifty] Eighty per cent or [$38,000,000,] $60,000,000, whichever is less, shall be paid into the rental housing revolving fund established by section 201H-202."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on January 1, 2019.

 

 

Report Title:

Conveyance Tax; Land Conservation Fund; Rental Housing Revolving Fund

 

Description:

Amends the basis and rate for the conveyance tax, adds an exemption to the conveyance tax for qualified affordable housing, and increases allocations of the conveyance tax to the Land Conservation Fund and the Rental Housing Revolving Fund.  (HB2750 HD1)

 

 

 

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