Status of Leased Fee Conversion Tax Credit Bill

On April 22, 2005, I reported on a Conference Committee Hearing on the leased fee conversion tax credit bill. The committee passed out an amended version of the bill and it will be going to House and Senate floors for final vote next week.

HB 1554 CD1 This bill will exempt from taxation 50% of the income received from the sale to a lessee of the leased fee interest in a residential house lot or multi-family residential leasehold property, or to the association of apartment owners, residential cooperative, or planned community of the multi-family residential leasehold building. Since Honolulu repealed Chapter 38 providing for mandatory conversion of the leased fee interest in condominiums and residential cooperatives, the tax incentive would be a welcome change to the law which may remove one reason a lessor may be unwilling to sell the leased fee interest to the lessees.