STAND. COM. REP. NO. 243-26

Honolulu, Hawaii

, 2026

RE: H.B. No. 1918

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

Your Committee on Water & Land, to which was referred H.B. No. 1918 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose of this measure is to impose the conveyance tax on the transfer of a controlling interest of an entity with an interest in real property.

Your Committee received testimony in support of this measure from Indivisible Hawaiʻi; AARP Hawaiʻi; and numerous individuals. Your Committee received testimony in opposition to this measure from the Grassroot Institute of Hawaii and one individual. Your Committee received comments on this measure from the Department of Taxation; Hawaiʻi Association of REALTORS; Tax Foundation of Hawaii; and one individual.

Your Committee finds that this measure brings parity between direct real estate transfers and indirect transfers made through business entities by applying the existing conveyance tax to transactions where a person or entity acquires a controlling interest in a business that owns real property, treating these indirect transfers in the same manner as direct transfers of real estate. Your Committee further finds that this measure supports equitable taxation by closing a long-standing loophole that has allowed sophisticated commercial real estate deals to avoid paying the conveyance tax. Your Committee also finds that this measure ensures all property transfers are treated fairly, regardless of how the transaction is structured.

Your Committee has amended this measure by:

(1) Providing that the conveyance tax shall be based on the fair market value of the property at the time of the transfer or acquisition of the controlling interest;

(2) Imposing liability on the transferee in the event that the transferor of the controlling interest does not pay the tax due;

(3) Deleting the proposed requirement for the Director of Taxation to adopt rules pursuant to chapter 91, Hawaii Revised Statutes, including rules for determining whether persons are acting in concert for the purpose of transferring or acquiring a controlling interest;

(4) Changing its effective date to July 1, 3000, to encourage further discussion; and

(5) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Water & Land that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1918, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1918, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Water & Land,

____________________________

MARK J. HASHEM, Chair