THE SENATE |
S.B. NO. |
1606 |
THIRTY-SECOND LEGISLATURE, 2023 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to taxation.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that vacant homes negatively impact Hawaii's housing supply by taking units out of the local housing market, and Hawaii's property taxes are amongst the lowest in the nation. These factors have enabled investors to purchase units as investment properties and allow them to sit empty, rather than contribute to the local rental stock. Foreign investment in high-end second homes increased from $500,000,000 per year from 2008 to 2015 to $1,000,000,000 per year for 2016 and 2017. Continental investors purchase another $4,000,000,000 to $5,000,000,000 each year in Hawaii's real estate market. In Honolulu, the long-term vacancy rate of 5.3 per cent and available vacancy rate of 3.4 per cent are among the highest in the nation.
The legislature further finds that implementing a surcharge on the conveyance tax for prolonged vacant properties can disincentivize empty investment properties and generate revenue for the State. One of the leading examples comes from Vancouver, British Columbia, which implemented a one per cent empty homes tax on the property's assessed taxable value in 2018. The goal of that law is to encourage conversion to rental use, but subsequent findings suggest that many owners chose to pay the tax rather than rent their property. This generated nearly $30,000,000 in revenue and reduced the vacancy rate by roughly fifteen per cent. However, the number of owners who chose to pay the tax rather than rent out their unit suggest that a steeper vacancy tax may be more effective at returning units to the rental market.
The purpose of this Act is to disincentivize the residential property speculation that makes the housing market so challenging for residents by establishing a conveyance tax surcharge on conveyed real property that has been vacant for a prolonged period of time.
SECTION 2. Chapter 247, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§247- Conveyance tax vacancy surcharge. (a) A conveyance tax vacancy
surcharge shall be imposed on every prolonged vacant property subject to the
tax imposed by section 247-1.
(b)
The rate of the vacancy surcharge shall be three per cent of 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 prolonged vacant property
or any interest therein, that shall include any liens or encumbrances thereon
at the time of transfer or conveyance.
(c) The vacancy surcharge shall have the same exemptions as in section 247-3.
(d) As
used in this section, "prolonged vacant property" means real
property that has been vacant for one hundred eighty days or more in a calendar
year."
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2023.
INTRODUCED BY: |
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Report Title:
Conveyance Tax Vacancy Surcharge; Prolonged Vacant Property
Description:
Establishes a surcharge on the conveyance tax upon the transfer or conveyance of prolonged vacant property.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.