Report Title:

Income Tax; Real Property; Anti-speculation

 

Description:

Assesses a graduated anti-speculation tax on the capital gains realized on real property held from less than 6 months and up to 24 months before sold.  Deposits realizations to rental housing trust fund.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1002

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO INCOME TAX.

 

 

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

 


     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-    Anti-speculation capital gains tax on real property.  (a)  In addition to the capital gains tax imposed under this chapter, there shall be an anti-speculation capital gains tax on the net capital gains realized by a seller of real property, less commissions, fees, and other charges, if any, related to the sale.  The tax shall be as follows:

     (1)  If the real property was held by the seller for less than six months prior to the sale, the tax shall be sixty per cent of the capital gains tax owed;

     (2)  If the real property was held by the seller for six months but less than twelve months prior to the sale, the tax shall be thirty per cent of the capital gains tax owed; or

     (3)  If the real property was held by the seller for twelve months up to and including twenty-four months, the tax shall be fifteen per cent of the capital gains tax owed.

     (b)  This section shall not apply to real property sold to provide affordable rental housing for a period of not less than ten years to a resident earning less than one hundred forty per cent of the median Hawaii income, as determined by the department of taxation.

     (c)  The sale of unimproved real property shall not be subject to this section, but shall be determined under section 235-51(f).

     (d)  The department shall deposit all tax realizations pursuant to this section into the rental housing trust fund under section 201H-202."

     SECTION 2.  Section 201H-202, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  The following may be deposited into the fund: appropriations made by the legislature, private contributions, moneys derived from the anti-speculation capital gains taxes under section 235-  , repayment of loans, interest, other returns, and moneys from other sources."

     SECTION 3.  Section 235-51, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

     "(f)  [If] Except as provided under section 235-  , if a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of:

     (1)  The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of:

         (A)  The taxable income reduced by the amount of net capital gain, or

         (B)  The amount of taxable income taxed at a rate below 7.25 per cent, plus

     (2)  A tax of 7.25 per cent of the amount of taxable income in excess of the amount determined under paragraph (1).

     This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

     SECTION 6.  This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2006.

 

INTRODUCED BY:

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