STAND. COM. REP. NO. 1618

Honolulu, Hawaii

, 2005

RE: H.B. No. 1554

H.D. 2

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1554, H.D. 2, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO LEASEHOLD CONVERSION,"

begs leave to report as follows:

The purpose of this measure is to allow a fee owner to exclude from taxable income one hundred per cent of the gain realized from the sale of a leased fee interest in a residential house lot or multi-family unit to the lessee of the house lot or unit.

Your Committee finds that there remain a few lessees of house lots and many multi-family residential units that wish to purchase the leased fee interest in their residences. This measure, rather than compel fee owners to sell the leased fee interest, provides an incentive for fee owners to sell the leased fee interest in these residences.

This measure will allow fee owners who sell the leased fee interest in any house lot or multi-family residential unit, in tax years 2006 through 2010, to exclude one hundred per cent of any gain realized from their taxable income. The exclusion will also include the sale of the leased fee interest in any multi-family residential leasehold property to the association of apartment owners or the residential cooperative corporation of the multi-family residential leasehold property.

Your Committee has amended this measure by deleting its contents and inserting in its place the language contained in S.B. No. 1793, S.D. 2. In this manner, the measure is amended by:

(1) Deleting the exclusion of gain realized from taxable income for any sale by a fee owner of a leased fee interest in any multi-family property to the association of apartment owners or the residential cooperative corporation of the multi-family property; and

(2) Changing its effective date to facilitate further discussion on this matter.

Your Committee has further amended this measure by reducing the amount that can be excluded from taxable income to fifty per cent of the income derived from the sale.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1554, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1554, H.D. 2, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair