STAND. COM. REP. NO. 891

Honolulu, Hawaii

RE: S.B. No. 884

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 884, S.D. 1, entitled:

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

begs leave to report as follows:

The purpose and intent of this measure is to temporarily exclude from income taxation one hundred percent of the gain realized by a fee simple owner from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development to the association of apartment owners or the residential cooperative housing corporation of the leasehold units.

Your Committee received written comments in support of this measure from three individuals.

Your Committee received written comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that this measure proposes an exemption modeled after the exemption authorized by Act 166, Session Laws of Hawaii 2007, which was repealed on December 31, 2012. Your Committee believes that the reestablishment of the exemption will give landowners an incentive to sell to condominium lessees the fee interest in their units, and bring stability to the State's condominium housing market.

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 S.B. No. 884, S.D. 1, and recommends that it pass Third Reading.

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

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DONOVAN M. DELA CRUZ, Chair